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Japan’s taxes on cryptocurrency firms are causing some to leave the country.

Crypto firms in Japan have petitioned the government to reform tax regulations that they claim are forcing them out of the country. Recent policy pronouncements by the administration imply that their pleas have gone unheeded.

Source: techdee

On December 10, Japan’s ruling coalition passed a tax proposal for the fiscal year 2022 that keeps token listings taxable. If tokens are posted on an active market, issuers must pay taxes even if they do not sell.

If a project lists part of its tokens on exchanges while keeping the rest in its treasury, it must pay taxes on what it owns if the market value rises.

If the core team lacks the means to pay taxes, as is frequently the case with early-stage firms, it is compelled to sell more tokens to public markets. This has a negative impact on both the token price and the project’s overall health and direction.

According to certified tax accountant Kenji Yanagisawa, the token issuer’s tax rate is roughly 35%.

Japan’s corporate tax policy has compelled crypto project creators to dissolve their Japanese businesses and relocate to other nations.

Mai Fujimoto, the founder of Gracone, a blockchain and cryptocurrency consulting firm, stated that she is aware of eight projects that have left Japan.

Tokens are taxed once they are published on an active market, but there is no clear definition of what constitutes an active market, according to him.

Listing on a big exchange like Binance almost certainly represents an active market, but he is unsure if listing on a decentralized exchange or an exchange with minimal trade volume counts as one.

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