The government of Japan outlined its Tax Reform Plan for 2015 on 30 December 2014.
The main changes are summarized below:
– The corporate income tax rate will be reduced from 34.62% (2014) to 32.11% (2015) and 31.33% (2016).
– Exemption for received dividends is reduced. Currently, a 100% exemption applies to dividends received if the receiving corporation holds 25% or more of the shares of the paying corporation. A 50% exemption applies in all other cases
– The percentage of “carry-forward losses” that may be used to offset against taxable income will be reduced from 80% to 5
– The VAT rate will be raised from 8% to 10% in April 2017.
– Resident individuals leaving Japan will be assessed on deemed capital gains arising from investment holdings (stocks, securities or derivatives) of JPY 100 million and above. The investment holdings will be deemed to be disposed of at fair market value and a tax will be imposed on the deemed gains. The tax will be annulled should the individual subsequently return to Japan within 5 years and he continues to hold the same investments on which the deemed tax was paid.
