Japan Endorses 20% Flat Tax on Crypto Profits

The Japanese government has endorsed a proposal to impose a flat 20 percent tax on cryptocurrency profits, marking a significant shift from the current progressive rates that can reach up to 55 percent. The change, led by the Financial Services Agency, aims to align digital asset taxation with that of stocks and other investment products, potentially taking effect as early as 2026.

Under the existing system, cryptocurrency gains are classified as miscellaneous income and taxed alongside salaries and other earnings, with rates starting at 5 percent and climbing progressively based on total income. High earners often face the top bracket, including an additional 10 percent inhabitant tax in some cases. The proposed reform would separate crypto profits into a dedicated category, subjecting them to a uniform 20 percent rate split between national and local authorities. This adjustment, officials say, seeks to simplify reporting for investors and reduce the tax burden that has deterred participation in the domestic market.

The Financial Services Agency has been developing the plan since mid-November, with the government and ruling coalition now supporting its inclusion in the fiscal...