Shift to Flat 20% Levy on Digital-Asset Gains Proposed
Japan is preparing to implement its most significant cryptocurrency tax reform in years, aiming to introduce a flat 20% levy on digital-asset gains. This shift is designed to align crypto with the taxation of equities and investment trusts, according to a report from Nikkei.
The proposed overhaul reflects a growing recognition among policymakers that crypto has evolved into a mainstream asset class deserving of standardized treatment within the country’s tax framework.
Restructuring Crypto Taxation
Under the plan, crypto profits would be moved into Japan’s separate-taxation category. This is a structure traditionally used for financial investments, where certain forms of income are taxed independently from salaries or business earnings.
The 20% rate would be divided between national and regional authorities, with 15% allocated to national authorities and 5% to regional authorities. The reform is expected to be incorporated into Japan’s 2026 tax package, with finalization scheduled for the end of December.
Addressing High Tax Deterrents
The move would mark a dramatic improvement from the current system faced by retail traders, who are subject to progressive tax rates that can climb as high as 55% on crypto gains. These steep levies have long been viewed as a major deterrent to domestic trading activity, prompting many investors to shift activity offshore or avoid the sector altogether.
Market Growth Amidst Current Regime
The renewed push around crypto taxation comes amid stable growth in Japan’s regulated trading ecosystem. Data from the Japan Virtual and Crypto Assets Exchange Association (JVCEA) shows spot volumes on local exchanges climbing past $9.6 billion in September. This underscores increasing market participation even under the existing high-tax regime.
Political Momentum and Future Implications
Government and ruling coalition backing for the flat-tax proposal suggests that political momentum is now firmly behind restructuring how crypto income is treated.
Analysts say the overhaul could make Japan one of the more competitive jurisdictions in Asia for digital-asset trading, particularly if coupled with ongoing regulatory modernization measures.
Should the reform be enacted, Japan would move closer to global norms on crypto taxation, offering greater clarity for investors and potentially stimulating renewed domestic market activity.