A Japanese lawmaker has proposed four changes to the existing tax system which are meant to ease the burden for crypto users. He also hopes that they will encourage adoption of cryptocurrencies in the country.
Earlier this month, Takeshi Fujimaki a representative of Nippon Ishin political party claimed that the country’s tax system should not crush the future of virtual currencies and the blockchain technology.
So, to avoid such a situation, he has suggested four amendments that are meant “to promote the wider [spread] of virtual currency into society.”
The Four Recommendations
The first suggestion was that the crypto gain tax rate should be 20 percent instead of the current 55 percent rate because cryptocurrency gains are not stable like salary income and chances of incurring a loss is high.
So, he believes that cryptocurrency gains should be taxed at the same rates like other investment options in the country like mutual funds and stocks.
Secondly, he proposed that cryptocurrency users should be allowed to carry forward crypto losses from the previous year to have a fair tax system.
The current system doesn’t enable crypto users to deduct losses from the past year and then pay profit on the difference like its the case with other investments like stocks and property.
His third recommendation was that there should be a tax exemption when it comes to trading two digital currencies. Currently, when one trades one crypto coin for another, they are expected to pay taxes on the profit made.
He believes that: “In order to increase the volume of transactions between virtual currencies and to revitalize the virtual currency market, trading between virtual currencies should be tax exempt.”
Also, he added that calculation of profits and losses for such transactions is complex and “extremely cumbersome.”
His fourth recommendation was a tax exemption for small payments made in crypto. He believes that’s the only way to promote their use as an everyday payment option without complicating the method for merchants.
Currently, merchants are expected to pay taxes on any profit realized after converting crypto received from customers to fiat.
Takeshi argued that the process hinders the use of crypto for everyday payments: “If you do everything like this, you cannot hope for penetration of virtual currency settlement in real society. The small amount of virtual currency settlement should be tax exempt, and the virtual currency settlement in the real world should be expanded.”