Japan cuts corporate crypto tax to 20% as parliament passes reform

Japan’s lower house approved a landmark tax reform that eliminates the end‑of‑period mark‑to‑market tax on corporate crypto holdings and aligns the corporate rate with the 20% rate applied to individual investors [1]. The change, finalized in a cabinet meeting on December 22, means companies will be taxed only on profits realized from the sale of virtual coins and tokens.

Key takeaways

• Companies will no longer pay tax on unrealized gains of crypto assets held at fiscal‑year end [1].
• Taxable events are limited to profits from the sale of virtual coins and tokens, matching the individual investor regime [1].
• The reform follows a request from the Japan Crypto Asset Business Association and aims to support domestic Web3 startups [1].
• Additional measures in the draft include a ¥40,000 per‑person reduction in income and residence taxes starting June 2024 [1].
• The bill still requires approval from the House of Councilors before becoming law [1].

End‑of‑period valuation removed for corporate crypto assets

The new policy revises the Corporate Tax Law by excluding the market‑price valuation of crypto assets that companies hold continuously. Previously, firms recorded profits or losses based on the difference between market value and book value at the fiscal year’s end. Under the reform, only actual sales of virtual coins and tokens trigger tax liability, bringing corporate treatment in line with that for individual investors [1].

Broader fiscal context and future considerations

The draft also proposes broader tax cuts, such as a ¥40,000 reduction in income and residence taxes per person and new tax incentives for strategic and innovative sectors, which together could reduce government revenue by roughly ¥3.87 trillion—the third‑largest decline since 1989 [1]. While the bill addresses corporate crypto taxation, discussions remain pending on how profits and losses from crypto transactions will be calculated, whether a flat tax will apply to conversions into legal tender, and the possibility of “pass‑through” deductions for three years after the reform [1].

Why it matters

By removing the mark‑to‑market requirement, the reform reduces the tax burden on companies that hold or operate crypto assets, potentially encouraging more domestic blockchain ventures and attracting foreign projects. The alignment with the 20% individual rate simplifies compliance and may make Japan a more attractive jurisdiction for crypto businesses, especially after earlier moves that allowed venture‑capital firms to invest directly in cryptocurrencies. The legislation still awaits passage by the House of Councilors, and further details on profit‑loss calculations and other crypto‑related tax rules are slated for future deliberation.