On December 22nd, the Japanese cabinet approved a proposal from the Liberal Democratic party to end corporate taxation on unrealized crypto profits. The proposal, if approved, would end the practice of using the mark-to-market method to value crypto assets owned by Japanese corporate entities.
Therefore, Japanese corporations would not need to pay taxes on unrealized crypto gains, which could signal a boon for the Web3 industry in the island-nation. The proposal, while approved, still needs to be debated in the National Diet, Japan’s legislature, and passed in the Upper and Lower houses.
The proposal came with guidance from the Japan Blockchain Association and Japan Crypto Asset Business Association (JCBA). In addition, two other recommendations were made:
- A flat 20% tax on crypto gains, replacing the progressive tax system for such assets
- The abolition of tax on crypto-to-crypto exchanges, which could spur crypto business
According to an interview conducted by CoinDesk with Gaku Saito, chairman of the JCBA, Web3 companies have been moving overseas due to the tax and have been forced to sell their assets, which stifles business development.
Japan has been at the forefront of Web3 country-wide innovation, enacting laws that make it easier for venture capitalists to invest in crypto companies and expressing a bullishness about this nascent technology sector.
Japan Sees Potential in Web3
While there are many countries that have innovated in Web3, Japan has been one of the top, with government officials, companies, and banks expressing positive sentiment in the past couple of years. Here are three stories we’ve covered that show that bullishness, starting with one from seven months ago.
In that news story, Japan’s All Nippon Airways launched the first non-fungible token marketplace in the airline industry. The marketplace featured airway themed NFTs and was created in collaboration with the largest airline holding company in Japan.
Next, ten months ago, a group of Japanese technology, finance, and manufacturing firms teamed up to build the “Japanese Metaverse Economic Zone.” The firms included Mitsubishi, Mizuho, Resona, Toppan, and SMBC, among others. The strategy fitted in the country’s overall Web3 strategy.
Lastly, about a year ago, Japanese PM Fumio Kishida spoke before the Japanese National Diet and revealed that the government is investing in a wide range of Web3 technologies. The PM made note that the country had already adopted some Web3 tech, including NFTs, and shared that in the future, there could be digital national identity cards, among other innovations.
As these stories show, Japan has been a global leader in adopting and advocating for Web3 tech. If today’s story is any indication, Web3 development in the country will increase, which bodes well for the space overall.