Japan to review cryptocurrency tax system in 2025
Japan's 2025 tax reform to overhaul cryptocurrency tax system, eases investor burdens
Japan’s controversial cryptocurrency tax system could see significant changes in 2025, as virtual currencies have been officially included in the government’s recently finalized tax reform outline.
The move comes as a relief for investors burdened by tax rates as high as 55% on crypto gains and 110% on inheritance taxes, reports Cryptopolitan.
New Tax Reform Plans for Crypto in 2025
The ruling Liberal Democratic Party (LDP) finalized its 2025 tax reform outline during a December 20 meeting. House member Junichi Kanda shared the update on X (formerly Twitter), confirming that the reform includes considerations for crypto tax adjustments.
Currently, Japan’s tax system treats cryptocurrency gains as “miscellaneous income”, subjecting investors to some of the highest rates globally and preventing them from offsetting losses. Calls for reform have grown louder, particularly from industry leaders and opposition figures like Yuichiro Tamaki, who advocate for a 20% flat tax rate with loss carryover provisions.
Former Digital Transformation Minister Takuya Hirai also submitted proposals through the Financial Services Agency (FSA) to shift the classification of crypto assets, making them contributors to the national economy. Reports indicate the proposal was well-received by Finance Minister Katsunobu Kato, signaling potential changes ahead.
Challenges and Outlook for Reform
Despite growing support, Prime Minister Shigeru Ishiba has expressed skepticism about cryptocurrencies as a legitimate asset class, casting some doubt on reform prospects. However, with formal discussions now part of the 2025 reform agenda, concrete steps toward a simplified tax regime appear more likely.
Investors and industry players are hopeful that Japan will move toward a 20% flat tax and allow for loss carryovers, aligning its policies with global standards. For now, the current tax laws remain in place through 2024, leaving crypto holders to navigate a complex system that critics compare to the Tokyo Metro subway—intricate but lacking efficiency.
Recently we wrote, that Metaplanet, a Japanese investment company listed on the Tokyo Stock Exchange, is ramping up its Bitcoin (BTC) acquisition strategy.
