"Japan's separate taxation for digital assets may be postponed to January 2028"

Uk Jin

Summary

It is reported that the application timing of the Japanese government's promoted separate taxation for digital assets is increasingly likely to be postponed to January 2028.
Currently in Japan, digital asset income is subject to comprehensive taxation with a top rate of 55%, but it was stated that with the introduction of separate taxation, an approximate 20% tax rate and loss carryforward deductions would become possible.
It was said that delays in preparing related systems, including investor protection and the tax reporting system, are the reason for postponing the tax transition timing.

There is a possibility that the timing for applying separate taxation to income from digital asset transactions such as Bitcoin (BTC), which the Japanese government is pursuing, will be delayed from the original schedule.

On the 20th (KST), CoinPost reported that an official familiar with the matter said, "It is true that the Japanese government plans to discuss an amendment to include digital assets in the Financial Instruments and Exchange Act (FIEA) at the regular Diet session in 2026," but added, "However, the timing of the shift to a different taxation method for digital asset income is increasingly likely to be postponed to January 2028, not January 2027."

The official explained that, in addition to applying the FIEA, investor protection measures and the organization of the tax reporting system are necessary to introduce separate taxation. As related system preparations are delayed more than expected, the timing of the tax transition could also be postponed.

Currently in Japan, income from digital asset transactions is classified as 'miscellaneous income' and subject to comprehensive taxation, and the top combined rate of income tax and resident tax reaches 55%. In contrast, stock or foreign exchange (FX) transactions are subject to a flat separate taxation of 20.315% and loss carryforward deductions are also allowed, so issues of tax fairness have been continuously raised among digital asset investors.

The industry expects that if separate taxation is introduced, a single tax rate of about 20% will be applied to digital asset transactions, and that netting of gains and losses and loss carryforward deductions will also become possible.

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