Japan tax newsletter | 04 February 2019

2019 Japan tax reform outline

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On 14 December 2018, the ruling party released the 2019 Tax Reform Outline. This newsletter provides an overview and explanation of the major amendments and revised provisions contained in the outline, which affect such matters as corporate taxation and international taxation.

To accomplish the twin goals of the Abe Cabinet, i.e. converting the social security system into a reliable system for all ages which provides comfort to all generations from the young to the elderly and ensuring the nation’s fiscal health, the consumption tax rate will be raised to 10% in October 2019. In order to smooth the fluctuations in demand that are expected to occur prior to and following the rate hike, sufficient support will be provided in terms of both national budget and tax rules. Tax measures to stimulate automobile and home purchases will be implemented. Furthermore, in order to secure a path for continuous growth amidst the aging of Japanese society, the “productivity revolution” and “human resource development revolution” continue to be issues of the highest priority. R&D tax rules will be revised from the perspective of encouraging innovative R&D. Various tax measures to assist small and medium- sized enterprises (SMEs) will be implemented and simultaneously, new tax payment deferment and exemption rules for inheritance tax and gift tax will be established to promote business succession of sole proprietors. Furthermore, transfer pricing taxation rules and earnings stripping rules will also be significantly revised to match the international standards concerning taxation agreed to in the OECD’s BEPS project and other forums.

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

* Please see the following PDF for the full contents.

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Webcast:2019 Japan inbound tax reform seminar