Japan’s Financial Services Agency (FSA) has unveiled a plan to overhaul the nation’s tax code, which could result in a reduction of the tax rate on cryptocurrency assets starting in 2025. The proposed reforms, detailed in an August 30 request, aim to align the taxation of crypto assets more closely with that of traditional financial investments.
The FSA’s proposal suggests treating cryptocurrencies as financial assets suitable for public investment. “Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be recognized as a financial asset that the public can invest in,” the FSA stated. “It is necessary to evaluate this issue from this perspective.”
Currently, crypto profits in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%. The highest rate of 55% applies to earnings exceeding 1,377 USD (200,000 Japanese yen), depending on the individual’s income bracket. In contrast, profits from stock trading are taxed at a maximum rate of 20%.
Corporate holders of crypto assets face a flat 30% tax rate on their holdings at the end of the financial year, regardless of whether they have realized a profit through sales.
Tax Reform Process
The proposed tax reform must go through several stages before becoming law. Government ministries submit tax reform requests to the ruling party, which then forwards them to a tax system research committee and Japan’s national legislature for review. The reform will only be enacted if approved by both houses of the Japanese government—the House of Representatives and the House of Councilors.
Advocates Push for Change
Crypto advocates in Japan have long sought revisions to the tax regime for digital assets. The Japan Blockchain Association (JBA), a pro-crypto lobbying group, formally requested a tax rate reduction in 2023. On July 19, the JBA submitted another request for tax reform for the 2025 fiscal year, proposing a flat 20% tax rate and a three-year loss carryover deduction to stimulate growth in the crypto sector.