Japan: Tax reform legislation (2020) passed by National Diet

Japan: Tax reform legislation passed by National Diet

The National Diet on 27 March 2020 passed the 2020 tax reform legislation.


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Items in the tax reform legislation include provisions concerning corporate taxation, international tax, consumption tax, individual tax, and tax administration matters (the tax reform proposals were agreed upon in December 2019; read TaxNewsFlash).

Corporate tax measures in tax reform legislation

  • Revision to consolidated tax return filing system (a shift to a Japanese group-relief system)
  • Amendments related to the introduction of the Japanese group-relief system, to replace the consolidated tax return filing system
  • Special measures for promoting “open innovation”
  • Amendments to limit special tax measures for eligible companies
  • Amendments to tax credits for acceleration of wage increases and capital investment
  • Extension of and amendments to deductible limit of entertainment expenses
  • Special measures for promoting investment in 5G technology
  • Amendments to business tax system for companies conducting the supply of electricity, etc.

International tax measures

  • New tax rules to prevent tax avoidance by creating tax losses from the transfer of shares in a subsidiary following dividends received from a subsidiary
  • Amendments to controlled foreign company (CFC) regime
  • Amendments to foreign tax credits
  • Amendments to earning stripping rules

Consumption tax measures

  • Changes to due date for filing certain consumption tax returns by companies

Individual income tax measures

  • Amendments to reporting requirements for overseas assets
  • Amendments to deduction for dependents for family members living overseas
  • Amendments to special measures for aggregation of profits and losses of real property income derived from second-hand overseas buildings

Read a March 2020 report [PDF 318 KB] prepared by the KPMG member firm in Japan

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