Japan's Crypto Taxes May Drop to 20% Flat Rate in 2026

Japan, a leading hub for cryptocurrency activity, has over 12 million local accounts holding more than ¥5 trillion in digital assets on exchanges. The National Tax Agency (NTA) and the Financial Services Agency (FSA) closely monitor all trades, swaps, and rewards, with gains taxed at rates up to 55%. This guide outlines the current tax system, reporting procedures, common deductions, penalties for non-compliance, and a proposed reform that could reduce crypto tax to a flat 20%.

The NTA and FSA are responsible for licensing exchanges and drafting regulations. The Payment Services Act classifies crypto as miscellaneous income, while the Income Tax Act sets the sliding tax scale. Currently, all profits from selling, trading, or earning tokens are added to annual salary and taxed as additional income. A proposed change by the FSA in June 2025 aims to transfer crypto regulation to the Financial Instruments and Exchange Act, potentially classifying crypto as a financial product and taxing earnings at a flat rate of 20%, similar to stocks.

Japan imposes various crypto taxes, including capital gains tax on sales, exchanges, or spending, and income tax on mining rewards, staking payouts, airdrops, salaries, and DeFi interest. Additionally, a 10% local resident tax is levied over the national tax. Corporate taxes are set at 30% on actual cash profits, with no taxes on unrealized gains for token issuers. Notably, there is no VAT or consumption tax on sending coins across wallets or paying merchants.

The tax rates and brackets in Japan are progressive, ranging from 15% for earnings up to ¥1.95 million to 55% for earnings exceeding ¥40 million. Non-permanent residents pay a flat rate of 20.42% on Japan-sourced crypto income. The tax year is the calendar year, with a filing deadline of 15 March. Crypto users typically file Form B, reporting totals in Section 6 (“miscellaneous income”). Japan accepts two cost-basis methods: the moving-average method and the total-average method. Late filing incurs a 5–15% surcharge plus interest, while understating income can add up to 40% in penalties.

Tax deductions include direct expenses like exchange charges and mining equipment, provided receipts are kept. Capital losses can offset other crypto profits within the same year but not salary or share-trading income and are not carried forward. Those with non-salary income below ¥200,000 are generally exempt from filing, unless they claim other deductions.

Domestic exchanges must share customer data with the NTA and FSA, and bank transfers over ¥1 million from overseas platforms are automatically reported. The tax office employs blockchain-analysis firms to match wallet addresses to real names. Filing late results in a 5–15% surcharge plus daily interest, while under-reporting can lead to a 40% surcharge. Hiding large gains can result in criminal charges, as seen in the first crypto-tax conviction in 2021, which led to a one-year prison term and a fine exceeding ¥22 million.

Parliament is set to debate the FSA’s reclassification bill in early 2026. If passed, crypto will move to a flat 20% separate-tax system, allowing losses to carry forward for three years. This reform could also pave the way for spot-crypto ETFs, aiming to attract new investment and prevent businesses from moving overseas.

Until the law changes, Japanese residents face some of the highest crypto taxes globally, with total rates reaching 55%. Every sale, swap, or reward is taxable, and compliance involves filing by 15 March, keeping full records, and using reliable tax software or a licensed tax professional. Adhering to current regulations avoids steep penalties and positions individuals to benefit from the proposed 20% flat-tax system.