Japan Proposes 20% Flat Tax on Crypto Gains by 2027, Aligning with Stock Trading Rules

Japan's government is advancing a plan to impose a flat 20% tax on cryptocurrency profits, a significant shift from the current progressive rates that can exceed 55%. The proposal, slated for implementation by 2027, seeks to classify crypto gains similarly to stock trading income, streamlining what has been a complex and often criticized tax regime.

Under the new framework, crypto earnings would be taxed separately from salaries and miscellaneous income, mirroring the capital gains treatment applied to traditional investments. Regulators are also considering reclassifying certain digital assets as financial products, which would subject them to stricter disclosure requirements and potential insider trading regulations.

Market participants are divided on the implications. While some welcome the clarity of a uniform rate, others anticipate increased compliance costs for exchanges operating under securities-style rules. The MOVE is being closely monitored by Asian crypto hubs, as Japan's lower retail tax burden could influence regional capital flows and trading activity.