Eliminating Mark-to-Market Valuation for Long-Term Holdings
Under the proposed revision, the mark-to-market valuation for crypto assets will no longer be applied if companies hold these assets for an extended duration. By removing this requirement, corporations will be relieved from paying taxes on unrealized gains derived from their long-term crypto holdings.
According to industry insiders, short-term holdings of crypto assets issued by other companies will remain subject to year-end unrealized gains taxation. Daiki Moriyama, director of Oasys, a gaming blockchain builder based in Japan and Singapore, emphasized the continued importance of short-term holdings in relation to tax obligations.
Approval Process and Potential Global Implications
While the Japanese government has given its initial approval for the tax regime revision, the proposal still needs to be submitted to a regular Diet session in January 2024. It will then require approval from both the Lower House and the Upper House to be implemented.
The significance of the government’s commitment to enacting tax reforms for the Web3 industry has not gone unnoticed. Moriyama affirms that this development has far-reaching implications for Web3 business stakeholders worldwide, recognizing the Japanese government’s dedication to cultivating a conducive business environment.
Prioritizing Web3 and Crypto Industry Growth
This potential change in the tax regime aligns with Japan’s prime minister, Fumio Kishida’s, statement in June. Kishida emphasized the transformative potential of Web3 in reshaping the traditional internet framework and contributing to social change. The Japanese government aims to establish an environment that facilitates the growth and advancement of web3 technologies.
In conclusion, the Japanese government’s approval of the 2024 tax regime revision signifies a significant step towards fostering the growth of the country’s Web3 and crypto industry. By excluding corporations from paying taxes on unrealized crypto gains for long-term holdings, the government aims to incentivize investment and innovation in this rapidly evolving sector.