Japan Proposes Flat 20% Tax Rate on Crypto Trading Gains

Japan is set to overhaul its cryptocurrency taxation framework with a proposed flat 20% levy on trading gains, marking a significant shift from the current progressive system that can impose rates as high as 55%. The reform, slated for inclusion in the 2026 tax policy, aims to align crypto taxation with rates applied to stocks and investment funds.

Under the new structure, crypto gains will be categorized separately from income or business earnings. The 20% levy will be split, with 15% allocated to the national government and 5% to local authorities. This move is expected to stimulate trading activity and bolster Japan's position in the global digital asset ecosystem.

The current tax regime, which treats crypto profits as miscellaneous income, has been a deterrent for retail investors. The proposed flat rate could provide much-needed relief and attract broader participation in the market. Japan's crypto trading volume, which reached 1.50 trillion yen ($9.6 billion) in September, underscores the sector's potential for growth under more favorable tax conditions.