Virtual Asset Tax Reform》Japan’s cryptocurrency profits tax is planned to be reduced to 20% and a number of tax reduction measures will be promoted

According to a report by Bloomberg, Japanese Prime Minister Shigeru Ishiba has reached an agreement with the main opposition party on an economic stimulus package, promising to hold cross-party discussions to push for comprehensive tax reform and implement the economic stimulus package. The economic stimulus package is expected to be approved by the end of 2024, with the three major political parties agreeing to pass the necessary supplementary budget by the end of December. The proposed tax reform measures include changes to income tax, corporate tax, and cryptocurrency tax, indicating a shift in the ruling party's policy, which had previously called for higher tax revenues. Cointelegraph reports that Japan's current cryptocurrency tax policy relies on the ambiguous and variable "miscellaneous tax," which could impose a tax rate of up to 55% on cryptocurrency transactions. The opposition party has called for a unified 20% tax rate on digital assets and other tax reduction measures. Other planned tax reform measures include raising the personal tax exemption from $6,650 to $11,345, reducing fuel taxes, and delaying a sales tax increase until actual wages have risen by at least 2%. As Japan seeks to consolidate its economy by 2025, the Japanese digital asset market has recently shown signs of maturity and growth. Prior to Shigeru Ishiba's election as prime minister in September, Yuichiro Tamaki, the leader of the Democratic Party of Japan, who was then seen as a frontrunner for the premiership, had promised to implement digital asset reforms to make Japan a world leader in Web3. While the Liberal Democratic Party will continue to govern after the October general election, the fierce competition has shown changes in the country's politics, with the LDP losing 68 seats in the House of Representatives, which may prompt a renewed push for bipartisan tax reform.

South Korea and Taiwan Considering New Crypto Taxation Rules

As Japan considers a 20% cryptocurrency capital gains tax, it is worth noting that the Democratic Party of Korea, the largest party in the South Korean National Assembly, has also announced plans to introduce a 20% tax on cryptocurrency gains starting in early 2025, but with the tax-free threshold raised from the original 2.5 million won ($1,795) to 50 million won ($35,919). Taiwan's Ministry of Finance has also stated that profits from cryptocurrency transactions will be taxed, as cryptocurrencies are considered digital assets under current tax laws, and any asset transactions with gains must be taxed. The ministry plans to strengthen auditing measures and introduce new audit procedures once the Financial Supervisory Commission establishes a dedicated law for virtual assets. Finance Minister Chuang Tsui-yun has promised to propose regulations for the taxation of cryptocurrency trading profits within 3 months, and Taiwan is expected to reference the experiences of other countries, such as South Korea's approach to tax-free thresholds, in developing a more comprehensive cryptocurrency taxation system.