The Japanese government has approved an amendment to the taxation of companies holding third-party-issued cryptocurrencies in its fiscal 2024 tax reform plan.
According to local news sources, the alteration to the taxation of firms holding third-party-issued cryptocurrencies means that such companies will no longer be subjected to the year-end mark-to-market valuation tax.
Before this amendment, corporations holding third-party-issued cryptocurrencies were required to record profits or losses based on the disparity between market value and book value at the end of the fiscal year.
Under the new reform, assets assumed to be held continuously will be exempted from this mark-to-market valuation.
This shift in policy means that companies will now be taxed solely on profits arising from the sale of digital currencies and tokens. The goal is to align the corporate tax system with the tax system applicable to individual investors.
Reports recently emerged that lawmakers from the country’s Liberal Democratic Party and their coalition partner Komeito were considering a proposal to exempt corporations from taxes on crypto gains that are not yet realized.
Analysts in the region saw it as Japan’s attempt to inject more liquidity into the market, aligning itself with other Asian regions making strides to become centers of crypto activity.
The amendment was inspired by the Japan Crypto Asset Business Association’s (JCBA) request for tax reform and is expected to foster the growth of local startup businesses utilizing blockchain technology as well as attract international projects.
Previously, only digital currencies issued by the companies themselves were excluded from mark-to-market taxation.
This proposal will be presented at the regular session of the Diet in January of next year, where it will require approval from both the House of Representatives and the House of Councilors.
Read More: Japanese cabinet approves crypto tax reform for fiscal 2024