Presently, crypto gains in Japan are classified as miscellaneous income, which means that they are subject to a tax rate of up to 55%.
Yuichiro Tamaki has appealed to the emotional side of Japan’s crypto community following a recent statement he made on crypto tax. The leader of Japan’s Democratic Party for the People (DPP) shared his policy statement for the upcoming general election via a recent X post.
According to the post, Tamaki is proposing a reduction of the tax on crypto gains to a flat rate of 20%. While this may simply be a political calculation to gain favour in the sight of crypto enthusiasts, the bold proposal could significantly impact Japan’s growing crypto market.
A Push for Simpler Crypto Taxes and Regulations in Japan
Presently, crypto gains in Japan are classified as miscellaneous income. This means that they are subject to a tax rate of up to 55%.
For a long time, this has been a major concern for investors. More so, given the fact that other forms of investment are taxed at much lower rates.
To address the issue, Tamaki’s party is pushing for a 20% tax cap that would bring crypto investments to the same level as stock and real estate profits. Tamaki’s post reads partly:
“If you believe that cryptocurrency should be taxed at a flat 20% rate, instead of being treated as miscellaneous income, please vote for the Democratic Party for the People.”
Furthermore, the party is also pushing for tax exemptions for crypto-to-crypto exchanges, having added the same to its policy statement.
Lastly, the DPP wants to raise the leverage limit on crypto trading from 2x to 10x, with the move expected to attract more traders and speculators.
Currently, Japan’s leverage ratio is seen as restrictive, which has, so far, discouraged active trading on local exchanges. According to Daiki Moriyama, director of blockchain firm Oasys, the leverage ratio may have been the major cause of the low trading volumes in Japan that leave local exchanges struggling financially.
Potential Challenges Ahead for Tamaki’s Proposal
Tamaki’s ideas could potentially leave a huge mark on Japan. That is especially true as it could potentially make the country a more attractive destination for crypto traders.
However, in reality, turning the proposals into law will not be so easy. That is because the DPP only holds seven seats in Japan’s 465-member House of Representatives.
Nonetheless, there are signs of growing support. A recent poll conducted by Asahi Shimbun suggests that the DPP could double its representation in single-seat districts and increase its presence in proportional representation areas.
Even so, it remains to be seen whether the party’s ambitions will resonate with a large enough audience to make these crypto tax reforms a reality. As Japan prepares for the October 27 election, the outcome will be crucial in determining the future of crypto regulation in the country.
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