On 28 March 2024, Japan’s National parliament (Diet) approved the 2024 tax reform legislation. The legislation includes several significant measures aimed at economic stimulation and fiscal adjustment. The reform package encompasses multiple tax sectors and incorporates the following provisions pertaining to corporate taxation and international tax matters:
- Amendment of Global Minimum Tax Rules: The global minimum tax rules will be revised to align with the latest guidelines issued by the OECD.
- Tax Credit Incentives: The legislation introduces tax credit incentives to boost domestic production in strategic sectors such as electric vehicles, semiconductors, and other specified products.
- Digital Taxation: New consumption tax liability requirements will be imposed on online platforms. Operators acting as intermediaries will be responsible for the consumption tax owed on services provided by foreign service providers through their platforms.
- Cryptocurrency Reporting: Reporting requirements will be introduced to enforce the Crypto-Asset Reporting Framework (CARF).
- Extension and Expansion of Tax Credits: Tax credits for salary increases will be extended and expanded for three years, effective from 1 April 2024 to 31 March 2027. Additionally, strict restrictions will apply to special tax measures for large companies that fail to meet salary increase and capital investment conditions.
- Innovation Box Regime: A new innovation box regime will be implemented, allowing a 30% deduction on qualifying intellectual property income.
