Japan's New Economy Federation Reiterates Call to Expand Crypto Tax Separation

The New Economy Federation has reiterated its call for revising the cryptocurrency taxation system for the second consecutive year in its 2027 tax reform proposal. On January 15 (local time), according to blockchain media CoinPost, the Federation explained its proposed measures to the press.

The Federation proposes applying a flat 20% separate tax on cryptocurrency income, covering both transactions through cryptocurrency exchanges and direct peer-to-peer deals. It also demands that losses be carryforwardable against cryptocurrency-related income.

It maintains its request for adjusting the taxation timing—taxing only when converting cryptocurrencies to fiat currency rather than taxing each exchange between different cryptocurrencies. This point was included in last year's proposal as well.

The proposal also includes a call to abolish the minimum tax. The Federation argues that the current structure, which imposes an additional 30% income tax on annual earnings exceeding 340 million yen, could discourage entrepreneurs from restarting businesses. A survey by the Japan Venture Capital Association (JVCA) showed over 80% of respondents would consider starting their next venture overseas if minimum tax considerations are factored in.

Other proposals include lowering the highest income and resident taxes, reducing progressive taxation, reviewing the abolition of inheritance tax, and lowering corporate tax rates from over 30% to around 20%, citing the impact of defense special corporate tax.

The Federation also requested extending and making permanent a business succession tax exemption that expires at the end of 2027. It criticized rigid requirements for continued stock holding and noted that canceling a deferral could trigger immediate payment including interest, potentially leading to defensive management by successors that hinders active investment and wage increases.

For startup support taxes, it proposed improving the angel tax system by allowing securities companies to issue confirmation certificates instead of relying solely on prefectural authorities, which often cause delays in processing.

In last year's tax reform proposal, a separate tax framework was established for specific cryptocurrencies' spot and derivative trading, though limited in scope and set to apply from January 2028. The Federation is now urging an expanded scope and reconsideration of the taxation method during exchanges.