The Japanese government has proposed changes to taxation

To encourage widespread adoption of cryptocurrencies in the country and reduce losses for investors, Takeshi Fujimaki, a spokesman for the opposition political party Nippon Ishin, recommended four amendments to the legislation.

The First Amendment proposes a separate 20 percent rate on profits from cryptocurrencies, instead of the current rate of up to 55 percent, since profits from cryptocurrency transactions are volatile and there is a high likelihood of incurring losses. Accordingly, income from cryptocurrency activities should be taxed on the same basis as other investment assets.

Secondly, the legislator recommended allowing the transfer of losses to the future. Currently, if you make a loss in one year and make a profit from cryptocurrencies in the next, you still have to pay tax on the profits you made in the second year, without taking into account the previous losses. However, for other types of investment assets, taxpayers can deduct losses from total profits and pay tax on the difference.

The third amendment concerns the exemption from taxes on profits when trading between two digital currencies. 

To increase the volume of transactions between digital currencies and revitalize the market, trade between them should not be taxed. Moreover, calculating profits or losses on such transactions is complex and extremely cumbersome. 

And the last amendment concerns tax exemption for small payments. For example, currently, a person paying with cryptocurrency at a restaurant must pay income tax when converting fiat into cryptocurrency, which makes such payments less attractive to users. 

In October, the country's Tax Commission was also looking at ways to simplify the current tax filing system to help cryptocurrency investors properly report their income.