- Japan plans to introduce a 20% flat tax on all crypto profits. The tax would be split between local authorities (5%) and the national government (15%).
- Previously, the government taxed about 5% and 55% tax rates depending on the amount earned.
In 2026, Japan is preparing a major shift in how it would tax crypto profits. According to a recent report shared, the government has proposed a flat tax rate of aboutabout 20% on all profits gotten from either trading or holding onto the assets.
Although this current rate seems high, it is a significant drop from the current progressive tax system that is 55%. This high tax rate has discouraged so many Japanese investors who trade crypto locally and has pushed them to look at foreign exchanges or offshore accounts.
Japan’s Past Tax Rate, And What The Government Plans to Achieve
According to data from the International Monetary Fund, in the last few years, Japan has taxed all crypto profits between 15% and 55%, depending on the amount made. So, within the last 2-3 years, all Japanese-based crypto traders paid 15% and above to the government.
A few days ago, Nikkei Asia, a local news channel, shared that the government has proposed to reduce the tax rate to about 20% for all cryptocurrency profits irrespective of how much was made. With this new proposal, crypto would be classified under the same category as stocks, investment trusts, and all other traditional financial products.
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This system would also tax the investment income separately from a person’s salary or business earnings. The flat 20% tax would be divided between local and national authorities, with 5% going to regional governments as resident tax and the other 15% going to the national government as income tax.
These changes are expected to be part of the final 2026 tax reform package, which the government plans to release in late December. According to the details, the reform plans to not only support domestic crypto trading but also encourage broader participation in Japan’s equity markets. In addition to the reduced tax rate, the government is also considering an opportunity that would allow minors access certain tax-free investment programs, making it easier for young people to start investing early.
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