Japan Tax Reform

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