Virtual currency corporate tax system to be reviewed in 2024 Adjustments will be made to exclude “issued by other companies” from mark-to-market taxation = report

Improving the business environment

On the 5th, the ruling Liberal Democratic Party and Komeito held a tax investigation committee for fiscal year 2024 to assess requests for tax reform from various ministries and agencies.

(14:00-16:00) Subcommittee of Party Policy and Taxation Research Committee
Deliberation of individual items called “Marubatsu” is the highlight of the tax audit.
More than 150 members of the Diet participated, and each person was allowed to express their opinion once, and if successful, they could be promoted from × to ○.
(Parliamentary Vice-Ministers are on the government side, so they don’t have the right to speak, but they participate to study and support.) pic.twitter.com/W2TchEFbQg

— Junichi Kanda (Member of the House of Representatives, Parliamentary Vice-Minister of the Cabinet Office) (@Jun1CanDo) December 5, 2023

According to the Nikkei Shimbun, it has been decided to review the corporate tax system for crypto assets (virtual currencies), and virtual currencies issued by other companies held by corporations can now be excluded from mark-to-market taxation unless they are used for short-term trading purposes. They say they will make adjustments. If decided, it will be included in the ruling party’s tax reform outline for fiscal 2024.

Regarding the tax reform in 2024, only the request for reform is currently available on the Ministry of Finance’s website. The Financial Services Agency and the Ministry of Economy, Trade and Industry requested the above-mentioned “Review of the period-end mark-to-market valuation taxation of third-party holdings.”

connection: “Further revision of the crypto asset corporate tax system” Financial Services Agency releases tax reform request for FY2020

Following lobbying from within the government and the virtual currency industry, it has been decided that in the 2023 tax reform, only “in-house issued” virtual currencies held by corporations will be excluded from mark-to-market taxation if they meet the conditions. . At this point, there were voices saying that issues issued by other companies should be treated in the same way.

connection: National Tax Agency officially announces partial revisions to virtual currency corporate tax rules

Under the previous law, if a company held virtual currency, all unrealized gains at the end of the fiscal year were taxed. It has long been pointed out that this rule places a burden on companies and hinders innovation in virtual currencies and blockchain.

Regarding other requests

On the other hand, the amendment requests from various ministries and agencies do not include anything other than the above-mentioned information regarding virtual currencies. Regarding the 2024 tax reform, various domestic organizations have also submitted requests for reform.

The requests of each organization are mostly the same, and they mainly want the following:

• Make profits from virtual currency transactions subject to separate taxation
• Separate self-assessment taxation will also be allowed for derivative transactions.
• Allow losses to be carried forward as deductions
• Taxation on trading profits will be implemented all at once when converting virtual currency held to legal currency.

connection: “Cryptocurrency transactions will be subject to separate self-assessment taxation” Shinkeiren, led by Rakuten and Mikitani, proposes a tax reform plan to the government

Although such revisions have been requested for a long time, it is expected that they will not be revised in 2024.

connection: Will Japan’s virtual currency tax system really change? ｜WebX Report & Interview

The Cabinet decision on the tax reform outline finalized by the Tax Commission is expected to take place around mid-December.

connection:National Tax Agency “The number of investigations into virtual currency transactions and the amount of additional taxes are at a high level” Report released for the administrative year 2020

Japan’s Web3 Policy Special Feature

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