Yuzo Kano, the chief executive of Japanese cryptocurrency exchange bitFlyer, has publicly criticized a government proposal to significantly raise capital gains taxes on stock sales by company founders and executives, warning the policy would drive skilled entrepreneurs and innovators out of the country.
Kano’s Concerns Over Tax Policy
Speaking to reporters in Tokyo, Kano argued that compensation for venture founders in Japan is already “at a very low level” compared to global standards. He noted that most startup founders receive almost no initial salary, often relying on the future value of their equity to sustain their work. Kano shared his own experience, revealing that he earned just 4.8 million yen — approximately $33,000 — annually only after bitFlyer had achieved some measurable growth. Without the potential profits from his stock holdings, he added, the company itself would have struggled to survive its early years.
The Japanese government and ruling party have recently signaled their intent to impose a tax of up to 80% on such capital gains, a move that has prompted backlash from Kano and other prominent business leaders. Kano emphasized that while other countries offer preferential tax rates to attract top talent, Japan is moving in the opposite direction.
Global Competition for Talent
The proposed tax hike comes at a time when global competition for skilled entrepreneurs and tech executives is intensifying. Nations such as Singapore, the United Arab Emirates, and several European countries have implemented favorable tax regimes specifically designed to attract startup founders and investors. Japan’s policy shift, Kano argued, would undermine its ability to retain homegrown talent and compete in the rapidly evolving digital economy.
Industry analysts have noted that Japan’s startup ecosystem has shown signs of growth in recent years, with increased venture capital funding and a growing number of successful exits. However, experts warn that a punitive tax structure could reverse these gains, leading to a brain drain of the very individuals driving innovation and economic growth.
Impact on Japan’s Crypto and Tech Sectors
The bitFlyer CEO’s comments carry particular weight given his position at one of Japan’s largest and most established cryptocurrency exchanges. The crypto sector has already faced regulatory headwinds in Japan, including strict licensing requirements and high corporate tax rates. Kano’s warning suggests that the proposed founder tax could further dampen entrepreneurial activity in the digital asset space, potentially pushing blockchain and fintech startups to relocate to more favorable jurisdictions.
The debate also highlights a broader tension within Japan’s economic policy: balancing the need for tax revenue with the imperative to foster innovation and entrepreneurship. While the government has publicly supported startup growth through initiatives like the Startup Visa and various funding programs, critics argue that tax policies remain misaligned with these goals.
Conclusion
As Japan’s government and ruling party continue to deliberate the proposed tax changes, the response from business leaders like Yuzo Kano underscores a critical concern: without competitive incentives, Japan risks losing its most promising entrepreneurs to countries that actively welcome them. The outcome of this policy debate will have lasting implications for the country’s startup ecosystem, its position in the global tech race, and its ability to retain top talent in an increasingly mobile world.
FAQs
Q1: What is the proposed tax change in Japan?
The Japanese government and ruling party have proposed increasing capital gains taxes on stock sales by company founders and executives to as high as 80%, significantly higher than current rates.
Q2: Why does bitFlyer’s CEO oppose the tax hike?
Yuzo Kano argues that the tax hike would drive talented entrepreneurs overseas, as startup founders already receive low salaries and rely on stock profits for compensation. He warns Japan will lose competitiveness compared to countries with more favorable tax policies.
Q3: How would this affect Japan’s startup ecosystem?
Industry experts warn the tax increase could reverse recent growth in Japan’s startup sector, leading to a brain drain of founders and executives to countries with lower tax burdens, ultimately harming innovation and economic growth.
