Financial services tax alert | 22 January 2018

2018 Japan tax reform: Taxation related to financial businesses

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On 14 December 2017, the Liberal Democratic Party and Komeito released the 2018 Tax Reform Outline.

As symbolized by such keywords as “productivity revolution” and “human resources development revolution,” reflected in this tax reform outline are the establishment of tax rules in accordance with a deep resolve to carry out government-led large-scale reforms for continuous economic growth and revisions of tax rules in consideration of the formulation of international taxation rules in accordance with items agreed to in the BEPS (Base Erosion and Profit Shifting) project.

Specifically, reforms with large impacts on the taxable income and tax burden of entities are expected, such as revisions of taxation rules including measures for the reduction of corporation tax to incentivize wage increases and productivity enhancements, regulations related to permanent establishments and CFC (Controlled Foreign Company) rules.

Furthermore, because reforms directly impacting financial businesses (e.g. revision of foreign tax credits relating to securities investment trusts and the treatment of consumption tax relating to the transfer of paperless securities) are included in the financial and securities tax rules, attention should be given to the details of such treatments, which will be clarified at a later date.

This alert provides commentary regarding finance-related tax rules and major reforms specific to financial institutions contained in the 2018 Tax Reform Outline.


  1. Measures related to the enhancement of the convenience of NISA
  2. Revisions related to Specified Accounts
  3. Revision of foreign tax credits relating to securities investment trusts
  4. Tax incentives for wage increases and productivity enhancements
  5. Revision of CFC rules
  6. Domestic/foreign judgment of consumption tax relating to the transfer of paperless securities
  7. Revision of the definition of permanent establishments (PE)
  8. Revision of gift tax and inheritance tax related to general incorporated associations
  9. Other
  10. Concluding remarks

* Please see the following PDF for the full contents.

Download this tax alert as a PDF file.