The 2025 Japanese tax reform mentions the 'Virtual Money Tax System Review' to introduce clarity in tax separation.

According to CoinPost, in the 2025 (Reiwa 7) tax reform, the tax review of Virtual Money (crypto assets) has finally taken the first concrete step. The "Virtual Money Tax Review" has been included as an issue for the first time in the tax reform guidelines jointly formulated by the LDP and the Komeito Party, and it is expected that the problems of high taxation and inadequate regulation, which have long been criticized, will be improved. The following is a detailed analysis of the background, specific contents and future prospects of this correction.

What is the outline of tax reform?

The tax reform outline is a document formulated by the ruling party at the end of each year, serving as a blueprint for the tax reform in the following year. The contents recorded in the outline will be reviewed in the regular congress of the following year and promoted as bills. Especially for the review of the tax system for Virtual Money, which has been a focus of discussion for many years, whether it can be successfully included in the outline is regarded as an important milestone.

The current situation and challenges of Virtual Money taxation

Currently, in the tax system of Virtual Money, trading income is classified as "miscellaneous income", subject to the highest tax rate of 55%. In addition, even the exchange between Virtual Money will incur tax obligations. At the same time, losses cannot be offset across years, which has led to many problems, including:

The overseas loss of startups and outstanding talents

International competitiveness in the Web3 field is declining

These challenges have long been criticized and urgently need improvement.

The meaning of 'tax system review' clearly stated in the outline

In this outline of tax reform, Virtual Money is positioned as a "financial product that contributes to the formation of national assets". The outline points out that the tax system of Virtual Money transactions should be reviewed with reference to investor protection measures and related regulations for listed stocks. It mainly includes the following points:

Study on the introduction of separate declaration and taxation system for cryptocurrency trading

Improving regulations and tax reporting obligations

Strengthening Legal Measures for Investor Protection

This record makes it possible to review the tax rate adjustment and the netting rules of Virtual Money.

Councilor Hirai's emergency advice and the response from the Financial Department

Liberal Democratic Party's digital division member Takuji Hirai has submitted a report titled 'Emergency Suggestions for Developing Cryptocurrency as a Boost to the National Economy' to the Financial Services Agency. The report includes the following three key points:

Include the profits and losses of Virtual Money transactions in the scope of separate declaration and taxation.

Improve relevant regulatory framework

Enhanced network security protection

It is reported that the Minister of Finance, Taro Kono, has expressed support for this proposal, and it is worth looking forward to the advancement of the relevant system design in the future.

Impact on investors and future prospects

The tax review of Virtual Money could bring significant improvements for investors. If the separate tax system for declaration is introduced, investors' tax burden will be greatly reduced compared to the current miscellaneous income tax rate. In addition, the introduction of the profit and loss offset system will provide a more favorable long-term trading environment for investors.

The description in this outline greatly increases the possibility that the review of the Virtual Money tax system will become a specific policy package when the tax system is revised in 2025.

Progress on the issue of the "annual income threshold of 1.03 million yen"

The issue of the 'annual income threshold of 1.03 million yen' that has also received attention, has proposed a solution in this revision. The tax-free income ceiling will be raised to 1.23 million yen, and Yuichiro Tamaki, the leader of the National Democratic Party, further urged to raise the target to 1.78 million yen. This issue will continue to be the focus of future discussions.

The upgrade of the Japanese industry begins with tax reform. Please provide the text to be translated. The outline of this tax reform includes a review of the Virtual Money tax system, which is undoubtedly a groundbreaking progress for the Japanese cryptocurrency industry. With the improvement of regulations and the reduction of tax burden, it is expected that the domestic market will become more vibrant and promote innovative development. The specific institutional design of the Financial Services Agency and the National Tax Agency will be crucial, and how the tax reform for the fiscal year 2025 will be implemented will be worth continuous attention.

This article mentions the "Virtual Money Tax Review" in Japan's 2025 tax reform, separating taxation and introducing transparency. It first appeared in ChainNews ABMedia.