Japan revises corporate taxation of cryptocurrencies to support startups
The Japanese government plans to create a comfortable environment for startups. One way to stop the outflow of companies abroad, to Singapore in particular, is to introduce tax incentives for firms that issue their own crypto assets.
Japan’s Ministry of Economy, Trade and Industry, together with the Financial Services Agency, plans to revise corporate taxation of virtual currencies as part of the 2023 tax reform discussion.
The authorities’ main goal is to stop the outflow of promising businesses abroad. Recently, startups related to the crypto industry and issuing their tokens have been actively relocating to countries with a more favorable environment for development. A significant percentage of such firms choose Singapore. It attracts entrepreneurs by its loyalty and less restrictive regulation of the crypto sphere.
Why do startups massively leave Japan? The main reason is high taxes on unrealized profits from tokens held by companies. The undesirable trend was already noticed this spring.
“Most people go to Singapore because it's stupid to start a business in Japan,” said Hiroshi Mikitani, founder of the e-commerce company Rakuten, during the Digital Society Initiative conference on the digitalization of the Japanese economy.
The new tax system will exclude organizations’ virtual assets from market valuation at the end of the tax period. They are expected to be taxed only after the profit from the sale.
The support of crypto start-ups is one of the elements of the “new capitalism” strategy. According to the government’s plan, a full-fledged 5-year startup development plan will be presented at the end of 2022.
