2021 Japan tax reform outline

Japan tax alert 18 December 2020

The fiscal year 2021 tax reform outline was released on 10 December 2020. In this alert, we provide an overview of the major reforms and revised provisions contained in the outline. Please note that provisions may be revised, deleted or added during Diet deliberations regarding the reform bill.

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