Japan’s Financial Services Agency said it may be worth taxing crypto as a financial asset.
The country currently taxes crypto profits as income, which can result in a 45% tax rate for high earners.
Capital gains from sales of financial securities face a flat rate of 20%.
Japan’s Financial Services Agency said it’s worth considering if crypto holdings should be taxed as financial assets rather than as income.
“Regarding the tax treatment of crypto asset transactions, it is necessary to consider whether crypto assets should be treated as financial assets that should be the subject of investment for the public,” the agency wrote in a document examining tax reform on Friday.
Any change might lead to the highest-earning crypto holders paying a lower rate of tax. The country currently taxes crypto profits as income, which can be as high as 45% for people earning over 40,000,000 yen ($276,000). Capital gains from sales of securities such as shares face a flat rate of 20%.
“It is expected that crypto assets will contribute to the expansion of wages and the creation of household assets, but their use by individual investors is currently limited,” the report said.
The country has been reviewing its treatment of crypto over the last two years after heavy taxes seemingly led to a crypto company exodus in the country. It announced last year that Japanese crypto issuers won’t pay taxes on unrealized gains.