Japan’s Democratic Party for the People (DPP), led by Yuichiro Tamaki, has put forward a bold new crypto tax plan. This proposal aims to cut the current tax rate on cryptocurrency gains from a hefty 55% down to just 20%. Tamaki’s plan would align crypto taxes with those applied to stock market profits, providing significant relief for crypto investors in Japan.

Crypto Tax Plan as a Key Election Promise

Tamaki is making this crypto tax plan a central part of his election campaign. In an X (formerly Twitter) post on October 20, Tamaki urged voters to support the Democratic Party for the People if they believe crypto assets should be taxed separately at 20% instead of being classified as miscellaneous income. This move is aimed at making Japan a more attractive market for crypto and Web3 businesses.

Implementing the proposed crypto tax plan may face significant hurdles. Currently, the DPP holds only seven of the 465 seats in Japan’s House of Representatives. While the party lacks the necessary seats to push through the plan on its own, crypto has become one of the key election promises, gaining attention from other political parties.

Aligning Crypto Taxes with Stock Market Rules

Under Tamaki’s crypto tax plan, profits from cryptocurrencies would be taxed 20% flat, a similar rate to the capital gain tax in Japan. This would be a major shift from the current system, where crypto profits are taxed as miscellaneous income, with rates ranging from 15% to 55% depending on the individual’s total earnings.

In addition to the tax cut, Tamaki plans the tax-free swapping of crypto assets. Currently, even swapping between different cryptocurrencies can trigger taxable events, making it more difficult for investors to manage their portfolios without facing heavy tax burdens.

Aiming to Make Japan a Web3 Leader

Tamaki has also expressed his ambition to make Japan a leading nation in the Web3 business space. In response to a user on X, he hinted that the DPP might consider future tax cuts on other forms of financial income. However, for now, the party’s focus remains on cryptocurrency and blockchain technology as they try to position Japan as a global leader in the emerging Web3 economy.

Japan’s Financial Services Agency has also been working on tax reforms, with plans for a comprehensive overhaul of the country’s tax code by 2025. These changes are expected to include provisions that could benefit crypto investors, potentially aligning with Tamaki’s vision for a more crypto-friendly tax environment.

Political Challenges Ahead

Despite the promise of the crypto tax plan, the DPP faces an uphill battle in the upcoming election on October 27. A recent opinion poll conducted by local news outlet Mainichi suggests that the DPP is unlikely to win a majority. However, the party could potentially increase its seats in the lower house, moving from the current seven seats to as many as 20.

The ruling Liberal Democratic Party, along with its coalition partner Komeito, is expected to maintain control of the government. This makes it difficult for Tamaki’s crypto tax plan to become a reality without broader political support.

In summary, the DPP’s crypto tax plan, while bold and forward-thinking, is not guaranteed to pass. However, with the increasing interest in Web3 technologies and blockchain, the proposal could resonate with voters looking for financial reform and innovation. The results of Japan’s election will determine whether Tamaki’s vision for a more crypto-friendly Japan can take root.

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