Japan’s cryptocurrency industry is undergoing a wave of exits to friendlier markets due to the high corporate tax rate.
At least 20 firms are choosing to establish their crypto business elsewhere and leave Japan, said Sota Watanabe, chief executive of digital infrastructure developer Stake Technologies, in an interview with Bloomberg.
Crypto firms have been exiting Japan in recent years due to pressure from high taxes including a corporate tax rate of about 30 percent and an individual tax rate of up to 55 percent for crypto gains.
In an effort to maintain the competitiveness of crypto in Japan, two of the top industry bodies – the Japan Cryptoasset Business Association and the Japan Virtual and Crypto assets Exchange Association – are reportedly submitting a proposal to the financial regulator for tax changes.
According to a separate report citing a memo, the two groups planned to ask the government to stop taxing paper gains for crypto holdings held by companies for purposes other than short-term trading. The lobby groups also propose a uniform 20 percent income tax on individual investors’ crypto gains, instead of the current arrangement with rates as high as 55 percent.
According to Watanabe, Japan is lagging behind in the global tech race while a growing number of governments elsewhere are ramping up efforts to woo crypto firms.
Japan is an impossible place to do business,» he said. «The global battle for a Web 3.0 hegemony is underway, and yet, Japan isn’t even at the start line.
Stake Technologies relocated to Singapore in 2020 over tax pressures but Watanabe hopes to return to his home country of Japan, assuming that the government will yield to industry calls and lower corporate taxes on crypto next year. He also noted that it may take a few more years before the tax rate for individual investors is reduced.