Japan’s Crypto taxes are forcing some of the crypto users and businesses to leave the country because they face hefty corporate taxes when listing tokens up to 55% as we are reading more in our latest cryptocurrency news today.
Crypto companies in Japan have implored authorities to change the tax policies which some are driving them out of the country and the recent government policy announcements indicate that their calls are not heard. Japan’s ruling coalition approved a tax plan for the 2022 fiscal year whcih continues to tax crypto token listings. Once these tokens are listed on the active market, the issuers are liable to pay taxes even If they don’t sell. The project which lists some of the tokens on the exchanges and keeps the rest in the treasury obliged to pay taxes on what they hold if the market value goes up.
If the core team doesn’t have the funds to pay these taxes, as it usually happens with early-stage startups it is forced to sell more tokens to the public markets. This affects both the token price and the health of the project. The certified tax accountant Kenji Yanagisawa said the tax rate for the token issuers is around 35%. if the token issuer airdrops both the recipient and issuer are taxed. The current taxation regime won’t change for another year as Yanagisawa said. Because of Japan’s crypto taxes, many crypto projects and companies are dissolving their entities in Japan and are moving to other countries.
The founder of Gracone, Mai Fujimoto, said that she knows about eight projects that moved away from Japan and one of them is Astar Network that has a multi-chain decentralized application hub that is founded by Sota Watanabe. Watanabe said that unclear regulation and high taxes are becoming a very big issue in Japan. Tokens are taxed once they are listed on the active market but there’s no clear definition of the active market. The listing on the exchanges like Binance that constitutes an active market, it is unclear whether these listings on decentralized exchanges with low trading volumes will be counted as one.
Japan’s Financial Services Agency announced the launch of a Defi study group by Hideki Kanda who is a law professor at Gakushuin University and most of the members are legal scholars aside from the chief technology officer at Layer X and Sony executive. Watanabe created an entity in Singapore and dissolved his Japanese entity in 2021 and said that it costs $200,000 in legal fees. He set up a program to help other Japanese crypto companies to migrate to Singapore and has more plans to issue tokens there and also send feedback to the Japanese government.