Japan's regulator proposes tax breaks for investors, crypto

Japan's financial regulator proposed easing corporate tax rules for crypto assets as well as lighter levies for individual stock investors in support of Prime Minister Fumio Kishida's efforts to reinvigorate the economy.

Companies should be exempted from paying taxes for paper gains on crypto coins that they hold after issuing them, the regulator proposed in its annual tax-code change request announced Wednesday. The Financial Services Agency also called for boosting a program that gives tax breaks to individual investors.

The moves support Kishida's "New Capitalism" vision, which seeks to boost the world's third-largest economy. He has pledged to double the wealth of households while offering support to help the country's so-called Web3 businesses grow.

Soichiro Koriyama/Bloomberg

Crypto lobbying groups have been calling for changes, saying high corporate taxes have raised the bar for launching projects in Japan, causing some companies to relocate to Singapore and elsewhere. Currently, profit from cryptocurrency holdings, including unrealized gains, is subject to corporate tax of about 30%. 

For retail investors, the FSA wants to expand a tax break initiative known as the Nippon Individual Savings Account, by raising its investment limits and making the program permanent. Under NISA, individuals can have some of their investment gains and dividends exempt from capital-gains tax over a period of time.

The move marks the latest in years of efforts to prod individuals to put their savings to productive use, such as investing in stocks for the benefit of the broader economy. Japanese households hold roughly half of their 2 quadrillion yen ($14.5 trillion) financial assets in cash and deposits, Bank of Japan data show.

The tax panel of Japan's ruling Liberal Democratic Party makes decisions near the end of the year after reviewing proposals from government offices.