Japan appears to be nearing a milestone development that will see cryptocurrency-related income taxed at a lower rate than those for stocks. However, a top policymaker in the country appears not to be on board with the plan for now.
Not Enough Household Crypto Investors in Japan
Earlier today, Taro Aso, the Japanese Finance Minister, appeared at a meeting of the House of Councillors Committee on Financial Affairs. There, he took questions on the proposed plan to lower the tax rate on cryptocurrencies to a flat rate of 20 percent.
Speaking with Japan Restoration Association member Shun Otokita, Minister Taro explained that many households across the country still find it challenging to make cryptocurrency investments. Thus, he wasn’t so enthusiastic about reducing the tax rate.
— 日本維新の会 (@osaka_ishin) May 31, 2020
He further confirmed that up to half of all the financial assets that Japanese households own are now held in cash. With this much liquidity, convincing households to convert their money to crypto would be a daunting task. With the propensity of households moving to crypto still low, Taro explained that there wasn’t much needed to move ahead with the tax rate reduction.
Japan’s tax laws currently view crypto-related income – whether from lending, mining, or trading – as miscellaneous income on taxes. Thus, these incomes are subject to tax rates as high as 55 percent. On the other hand, traditional stocks in the country are still taxed at a 20 percent flat rate.
Crypto enthusiasts have clamored for a change in these tax laws. The rationale is understandable. Of course, higher tax rates will discourage people from conducting any crypto-related activity. The country’s cryptocurrency industry could suffer as a result of that. However, Taro’s reluctance to revise these laws could mean that the status quo will remain.
South Korea’s Planned Crypto Tax Law Reforms
Japan isn’t the only country to be looking into revising its crypto tax laws. South Korea, another top Asian economy, is reportedly gearing up to amend its current taxation regulations.
Last week, local news medium E Daily reported that South Korea’s Ministry OF Economy and Finance was preparing to amend the country’s Income Tax Law. The amendment could reportedly include rules for the profitable sales of digital assets, as well as profits coming from various crypto mining projects across the country.
As E Daily reported, the Ministry also brought up the idea of including profits generated by Initial Coin Offerings (ICOs). Such an amendment could change how South Korea’s government fundamentally sees ICOs, especially since they’re still banned.
The Ministry reportedly wants to consider capital gains tax or other income taxes made by investors in crypto asset transfers. An official also reportedly said that the taxation principle would be executed based on “taxes where income is located.”
South Korea’s government already attempted to tax individual crypto profits earlier in the year. Since these profits aren’t listed as part of income, they’re exempt from the country’s income tax rules.
Local news source Decenter reported that the tax law amendment should be ready by July. All things considered, lawmakers should be ready to present it to South Korea’s parliament by September.