Act on Special Measures Concerning Taxation

Where a resident or a nonresident who has a permanent establishment has made a transfer of a crypto asset prescribed in Article 2, paragraph (49) of the Financial Instruments and Exchange Act (limited to one whose name is registered in the register of financial instruments business operators prescribed in Article 29-3, paragraph (1) of that Act as a matter listed in Article 29-2, paragraph (1), item (xi), (a) of that Act (excluding one specified by Order of the Ministry of Finance in consideration of the state of its trading and other circumstances) or any other one specified by Order of the Ministry of Finance; hereinafter referred to in this paragraph, paragraphs (4) and (5) and paragraph (2) of the following Article as a "specified crypto asset") (limited to a transfer made through a sell order entrusted to a financial instruments business operator prescribed in Article 2, paragraph (9) of that Act (limited to one that conducts the crypto asset trading business prescribed in Article 28, paragraph (5) of that Act; hereinafter referred to in this paragraph and paragraph (4) as a "crypto asset trading business operator") or a transfer to a crypto asset trading business operator; the same applies hereinafter in this paragraph and in paragraph (2) of the following Article), with respect to the business income, capital gains and miscellaneous income from the transfer of the specified crypto asset, notwithstanding the provisions of Articles 22 and 89 and Article 165 of the Income Tax Act, income tax is imposed, separately from other income, on the amount calculated pursuant to the provisions of Cabinet Order as the amount of business income, the amount of capital gains and the amount of miscellaneous income from the transfer of the specified crypto asset during that year (hereinafter referred to in this paragraph as the "amount of capital gains, etc. on specified crypto assets"), in an amount equivalent to 15 percent of the amount of taxable capital gains, etc. on specified crypto assets (meaning the amount of capital gains, etc. on specified crypto assets (where the provisions of Articles 72 through 87 of that Act as replaced pursuant to the provisions of item (iii) of the following paragraph apply, the amount after that application)). In this case, if there is an amount of losses arising in the calculation of the amount of capital gains, etc. on specified crypto assets, the amount of losses is deemed not to have arisen for the purpose of applying the provisions of that Act and other laws and regulations concerning income tax.

Where the provisions of the preceding paragraph apply, the following applies:

for the purpose of applying the provisions of Article 2, paragraph (1), items (xxx) through (xxxiv)-5 of the Income Tax Act, the phrase "amount of timber income" in item (xxx) of that paragraph is deemed to be replaced with "amount of timber income and the amount of capital gains, etc. on specified crypto assets prescribed in Article 38-2, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation (hereinafter referred to as the 'amount of capital gains, etc. on specified crypto assets')";

for the purpose of applying the provisions of Article 69 of the Income Tax Act, the phrase "amount of capital gains" in paragraph (1) of that Article is deemed to be replaced with "amount of capital gains (for the amount of business income and the amount of capital gains, the amount calculated as if there were no business income or capital gains from the transfer, prescribed in Article 38-2, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation, of specified crypto assets prescribed in that paragraph)", and the phrase "amount of each type of income" is deemed to be replaced with "amount of each type of income (excluding the amount of capital gains, etc. on specified crypto assets)";

for the purpose of applying the provisions of Article 71 and Articles 72 through 87 of the Income Tax Act, the phrase "amount of gross income" in those provisions is deemed to be replaced with "amount of gross income, amount of capital gains, etc. on specified crypto assets";

for the purpose of applying the provisions of Articles 92, 95 and 165-6 of the Income Tax Act, the phrase "the preceding Section (Tax Rates)" in Article 92, paragraph (1) of that Act is deemed to be replaced with "the preceding Section (Tax Rates) and Article 38-2, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation", the phrase "taxable gross income" is deemed to be replaced with "the sum of the taxable gross income and the amount of taxable capital gains, etc. on specified crypto assets prescribed in Article 38-2, paragraph (1) of the Act on Special Measures Concerning Taxation", the phrase "amount of income tax on taxable gross income" in paragraph (2) of that Article is deemed to be replaced with "amount of income tax on taxable gross income, the amount of income tax on the amount of taxable capital gains, etc. on specified crypto assets prescribed in that paragraph", and the phrase "amount of income tax for that year" in Article 95 and Article 165-6 of that Act is deemed to be replaced with "amount of income tax for that year and the amount of income tax under the provisions of Article 38-2, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation";

beyond what is specified in the preceding items, special provisions concerning applications or returns under the provisions of Part II, Chapter V of the Income Tax Act and other necessary matters concerning the application of the provisions of laws and regulations on income tax in the case where the provisions of the preceding paragraph apply are specified by Cabinet Order.

Beyond what is provided for in the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (1) are specified by Cabinet Order.

The head of the business office (meaning the principal business office or office in Japan; the same applies hereinafter in this paragraph) of a crypto asset trading business operator that has conducted an act listed in Article 2, paragraph (8), item (xviii) or (xix) of the Financial Instruments and Exchange Act with respect to a specified crypto asset with a resident or a nonresident who has a permanent establishment must, by January 31 of the year following the year that includes the day on which the act was conducted, prepare a report stating the name and individual number of the resident or nonresident who has a permanent establishment, the name of the specified crypto asset, and other matters specified by Order of the Ministry of Finance, and submit it to the district director with jurisdiction over the location of the business office.

The relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may, when necessary for an investigation concerning the submission of the report referred to in the preceding paragraph, ask questions of the person who is obliged to submit that report, inspect that person's books and documents and other articles concerning the act prescribed in that paragraph with respect to the specified crypto asset referred to in that paragraph, or request the presentation or submission of those articles (including copies thereof).

The relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may, when necessary for an investigation concerning the submission of the report referred to in paragraph (4), retain articles submitted in that investigation.

The relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office, when asking questions, conducting an inspection, or requesting presentation or submission pursuant to the provisions of paragraph (5), must carry an identification card and present it to the person concerned when requested.

The authority of the officials under the provisions of paragraph (5) and paragraph (6) must not be construed as being granted for the purpose of criminal investigation.

Beyond what is provided for in the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (6) are specified by Cabinet Order.

Where a resident or a nonresident who has a permanent establishment who files a tax return (including a return under the provisions of Article 123, paragraph (1) of the Income Tax Act (including as applied mutatis mutandis pursuant to Article 166 of that Act) as applied mutatis mutandis pursuant to paragraph (5); hereinafter the same applies in this paragraph and paragraph (3)) has an amount of capital losses on specified crypto assets that arose in any year within the three years before that year (excluding any amount deducted in or before the previous year by applying the provisions of this paragraph), notwithstanding the provisions of the second sentence of paragraph (1) of the preceding Article, an amount equivalent to that amount of capital losses on specified crypto assets is, pursuant to the provisions of Cabinet Order, deducted in calculating the amount of capital gains, etc. on specified crypto assets for the year covered by the tax return, up to the amount of capital gains, etc. on specified crypto assets prescribed in that paragraph for that year.

The amount of capital losses on specified crypto assets prescribed in the preceding paragraph means, out of the amount calculated pursuant to the provisions of Cabinet Order as the amount of losses arising from the resident or nonresident who has a permanent establishment prescribed in that paragraph having made a transfer of specified crypto assets, the amount calculated pursuant to the provisions of Cabinet Order as the portion that cannot be fully deducted even after deduction in calculating the amount of capital gains, etc. on specified crypto assets prescribed in paragraph (1) of the preceding Article for the year that includes the day on which the person made that transfer.

The provisions of paragraph (1) apply only where the resident or nonresident who has a permanent establishment prescribed in that paragraph has filed, for income tax for the year in which the amount of capital losses on specified crypto assets prescribed in the preceding paragraph arose, a tax return to which a written statement concerning the calculation of that amount of capital losses on specified crypto assets and other documents specified by Order of the Ministry of Finance are attached, and has continuously filed tax returns thereafter, and where the tax return referred to in paragraph (1) has attached to it a written statement concerning the calculation of the amount to be deducted under the provisions of that paragraph and other documents specified by Order of the Ministry of Finance.

With regard to the application of the provisions of the preceding Article (excluding paragraph (2)) in the case where the provisions of paragraph (1) apply, the phrase "calculated amount (" in paragraph (1) of that Article is deemed to be replaced with "calculated amount (where the provisions of paragraph (1) of the following Article apply, the amount after that application;".

The provisions of Article 123, paragraph (1) (excluding item (ii)) of the Income Tax Act (including as applied mutatis mutandis pursuant to Article 166 of that Act) apply mutatis mutandis to the case where a resident or a nonresident who has a permanent establishment seeks the application of the provisions of paragraph (1) in or after the year following the relevant year, and the case falls under neither the case where the person must file a return under the provisions of Article 120, paragraph (1) of that Act (including as applied mutatis mutandis pursuant to Article 166 of that Act) for income tax for the relevant year nor the case where the person may file a return under the provisions of Article 122, paragraph (1) or Article 123, paragraph (1) of that Act (including as applied mutatis mutandis pursuant to Article 166 of that Act). In this case, in paragraph (1) of that Article, the phrase "seeks the application of the provisions of Article 70, paragraph (1) or paragraph (2) (Deduction for Carryover of Net Loss) or Article 71, paragraph (1) (Deduction for Carryover of Casualty Loss), or seeks a refund under the provisions of Article 142, paragraph (2) (Procedures for Issuing Refunds Based on Carryback of Net Loss), during the third period" is deemed to be replaced with "seeks the application of the provisions of Article 38-3, paragraph (1) (Deduction for Carryover of Capital Losses on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation", and the phrase "listed in the items of the following paragraph" is deemed to be replaced with "the amount of capital losses on specified crypto assets prescribed in paragraph (2) of that Article that arose in that year (hereinafter referred to in this paragraph as the 'amount of capital losses on specified crypto assets'), the amount of capital losses on specified crypto assets that arose in each year within the three years before that year, and other matters specified by Cabinet Order"; in item (i) of that paragraph, the phrase "amount of net loss" is deemed to be replaced with "amount of capital losses on specified crypto assets"; and in item (iii) of that paragraph, the phrase "amount of net loss and casualty loss (Article 70, paragraph (1) or paragraph (2) or Article 71, paragraph (1)" is deemed to be replaced with "amount of capital losses on specified crypto assets (Article 38-3, paragraph (1) of the Act on Special Measures Concerning Taxation", the phrase "and excluding those that formed the basis for calculating the amount to be refunded pursuant to the provisions of Article 142, paragraph (2); the same applies in that item" is deemed to be replaced with "excluding", the phrase "those amounts" is deemed to be replaced with "that amount of capital losses on specified crypto assets", and the phrase "the sum of the amount of gross income, the amount of retirement income and the amount of timber income" is deemed to be replaced with "the amount of capital gains, etc. on specified crypto assets prescribed in Article 38-2, paragraph (1) (Special Provisions on Taxation on Capital Gains, etc. on Specified Crypto Assets) of that Act".

With regard to the application of the provisions of the Act on General Rules for National Taxes in the case where the provisions of paragraph (1) apply, in Article 2, item (vi), (c)(1) of that Act, the phrase "or casualty loss" is deemed to be replaced with "or casualty loss, or the amount of capital losses on specified crypto assets prescribed in Article 38-3, paragraph (2) (Deduction for Carryover of Capital Losses on Specified Crypto Assets) of the Act on Special Measures Concerning Taxation", and the phrase "that Act" is deemed to be replaced with "those Acts".

Special provisions on the matters to be stated in the tax return to be filed in the case where the application of the provisions of paragraph (1) is sought in or after the year following the relevant year or in that year, and other necessary matters concerning the application of the provisions of the preceding paragraphs are specified by Cabinet Order.