Japan Tax Reform

Overview of the major amendments and revisions 

Corporate taxation

1. Revision of SME-related tax rules
2. Revision of lease-related tax rules
3. Clarification of calculation method for adjustment accounts in relation to assets transferred as result of a non-qualified merger
4. Distribution ratios for spin-offs of wholly-owned subsidiaries under the group relief system
5. Other

International taxation

1. Aligning with global minimum tax rules
2. Revision of Japanese Controlled Foreign Company (“JCFC”) rules

Individual income taxation and asset taxation

1. Recalibrating tax obligations amid inflationary trends
2. Other major revisions

Consumption Taxation

  Revisions to consumption tax exemption rules for foreign tourists

Tax rules and measures to secure funds for national defense build-up

Tax administration

1. Revision of the electronic book preservation act (e-retention) rules
2. Enhanced convenience of e-Tax

Newsletters and alerts in English

• 2025 Japan tax reform measures related to global minimum tax come into effect - UTPR and QDMTT (Japan tax alert, 08 May 2025)
• 2025 Japan Tax Reforms Enacted – Taxation highlights for Inbound Businesses (Japan tax newsletter, 18 April 2025)
• 2025 Tax reform outline – Taxation related to financial services and real estate (Japan tax newsletter, 13 March 2025)
• 2025 Japan tax reform outline - Translation of Japan tax newsletter which was issued on 22 Jan 2025 (Japan tax newsletter, 26 February 2025)
• 2025 Japan tax reform outline (Overview) (Japan tax alerts, 26 December 2024)

Webcast

• 2025 Japan inbound tax reform webcast

Overview of the major amendments and revisions 

Corporate taxation

1.  Tax incentives encouraging wage increases
2.  Creation of tax credit to promote domestic production in strategic industries
3.  Creation of the “Innovation box” regime
4.  Revision of R&D tax rules
5.  Revision of size-based enterprise taxation
6.  Other

International taxation

1.  Revision of top-up tax assumed as corporate tax
2.  Revision of qualified capital contributions in kind
3.  Revision of Japanese Controlled Foreign Company (“J-CFC”) rules
4.  Establishment of reporting system for the automatic exchange of information requests related to crypto asset transactions of non-residents
5.  Other

Individual income taxation

1.  One-time fixed amount reduction of income tax and inhabitant tax
2.  Revision of dependent deduction (2025 tax reform)
3.  Revision of housing-related tax credit for households with children
4.  Revision of stock option rules
5.  Expansion of angel investor tax rules

Consumption taxation

1.  Introduction of platform taxation
2.  Revision of tax-exempt enterprise system used by foreign businesses
3.  Revision of simplified taxation rules
4.  Revision of consumption tax exemption rules for foreign tourists (2025 tax reform)
5.  Other

Asset taxation

1.  Fixed asset tax
2.  Business succession tax rules

Tax administration

1.  Additions to heavy additional taxes
2.  Secondary tax liability on representatives of companies committing fraud to avoid taxes
3.  Other

Newsletters and alerts in English

• The Impact of the 2024 Japan Tax Reforms for Inbound Businesses: Detailed Review (Japan tax newsletter, 27 March 2024)
• The Impact of the 2024 Japan Tax Reforms for Inbound Businesses (Japan tax alerts 27, December 2023)

Webcast

• 2024 Japan inbound tax reform webcast

Overview of the major amendments and revisions 

Corporate taxation

1. Revisions to the general R&D tax incentive
2. Introduction of a digital transformation (DX) investment promotion tax incentive
3. Introduction of a tax incentive to promote carbon neutrality investments
4. Special measure concerning the deduction limit of net operating losses (NOLs)
5. Introduction of a tax measure to encourage M&As compensated through the utilization of shares
6. Revision of the tax incentives to encourage wage increases and investments
7. Introduction of a tax incentive to help SMEs with the consolidation of their managerial resources
8. Other

Individual taxation and asset taxation

1. Tax rules related to housing
2. Fixed asset tax
3. Other

Tax administration

1. Revision of the electronic books maintenance rules
2. Revision of obligations to affix seal impressions on tax-related documents
3. Other

Other

1. Tax measures to facilitate the development of international financial hubs
2. Revision of the treatment of taxes withheld in foreign countries in relation to dividends distributed by foreign subsidiaries
3. Other

*Please note that the contents of this newsletter may be partially revised, deleted or added to in response to future Diet deliberations on the reform bill.

Newsletters and alerts in English

• Japan tax reform outline – Taxation related to finance and real estate (Japan tax newsletter 4 March 2021)
• 2021 Japan tax reform outline (Japan tax newsletter 22 February 2021)
• 2021 Japan tax reform outline (Japan tax alert 18 December 2020)

Webcast

• 2021 Japan inbound tax reform webcast

Overview of the major amendments and revisions 

Corporate taxation

1.  Revision of the consolidated taxation regime
2.  Establishment of measures pertaining to open innovation
3.  Tax measures to encourage investment and salary increases
4.  5G infrastructure (5th generation mobile communication systems)
5.  Revisions of the regional revitalization tax rules
6.  Others

International taxation

1.  Addressing schemes which incorporate dividends received from subsidiaries and subsidiary share transfers
2.  Revision of the controlled foreign company (CFC) regime
3.  Revision of the scope of foreign taxes eligible as foreign tax credits
4.  Revision of the scope of non-qualified interest expenses under the earnings stripping rules
5.  Revisions to the reporting regulations for the automatic exchange of financial account information concerning nonresidents (data exchange pursuant to the Common Reporting Standards (CRS))

Individual income taxation, tax administration and other reforms

1.  Individual income taxation
2.  Tax administration
3.  Other reforms

*Please note that the contents of this newsletter may be partially revised, deleted or added to in response to future Diet deliberations on the reform bill.

Newsletters and alerts in English

• 2020 Tax reform outline - Taxation related to finance and real estate（Japan tax newsletter 12 March 2020）
• 2020 Japan tax reform outline（Japan tax newsletter 13 February 2020）
• 2020 Japan tax reform outline（Japan tax alert 18 December 2019）

Webcast

• 2020 EY Japan inbound tax reform