Japan tax newsletter | 22 January 2018

2018 Japan tax reform outline

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On 14 December 2017, Japan’s ruling party (a coalition comprised of the Liberal Democratic Party and Komeito) released the 2018 Tax Reform Outline (below “the 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.

The greatest issue currently facing the Abe Cabinet, which has engaged in initiatives to overcome deflation and revitalize the economy over the past five years, is ensuring a “productivity revolution” and “human resources development revolution” to overcome the aging of Japanese society. Amendment and revision of tax rules will occur in response to these challenges. In a continuation of the previous year, from the perspective of supporting “work style reform” in response to socioeconomic structural changes, revision of individual income taxation (revision of various income deductions) will occur. With respect to corporate taxation, from the perspective of promoting productivity-enhancing capital investment and lasting wage increases, tax measures for wage increases and productivity enhancement, as well as tax measures promoting capital investment, will be established. Business succession tax rules will be radically expanded to facilitate the maintenance and enhancement of productivity enabled by smooth generational transitions at small and medium enterprises. Furthermore, international taxation rules will also be revised to match international standards agreed to in the OECD’s BEPS project.

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.

Contents

  • Corporate taxation
  • International taxation
  • Individual income taxation and asset taxation
  • Other amendments and revisions
  • Tax administration

* Please see the following PDF for the full contents.


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