Japan plans 20% flat tax for cryptocurrency gains

Japan is advancing a stimulus package and tax reforms, including a significant overhaul of cryptocurrency taxation, as part of efforts to stimulate economic recovery and simplify digital asset regulations.

Prime Minister Shigeru Ishiba announced the package, which includes replacing the variable "miscellaneous income" tax on cryptocurrency, currently as high as 55%, with a flat 20% rate.

This change responds to industry advocates and opposition calls for a more predictable and equitable tax structure for digital asset transactions.

The stimulus plan also includes broader tax relief measures, such as raising the tax-free income threshold from $6,650 to $11,345, reducing fuel taxes, and cutting sales taxes until the employment market improves by at least 2%.

These initiatives reflect a bipartisan effort to tackle Japan’s economic challenges.

Japan’s cryptocurrency market has experienced substantial growth and maturity, strengthening the nation's role in the global digital asset landscape.

Before Ishiba’s election, Democratic Party for the People leader Yuichiro Tamaki had pledged to position Japan as a Web3 and digital asset leader.

Although Tamaki’s defeat left the Liberal Democratic Party in power, the close election and loss of 68 seats likely influenced the renewed focus on tax reform.

The proposed changes highlight Japan’s commitment to fostering a competitive environment for digital assets while addressing economic recovery.

The package is expected to receive approval by the end of 2024, paving the way for further advancements in the country’s digital asset policies.