Japan: Tax reform proposals for 2021

Japan: Tax reform proposals for 2021

The ruling coalition (the Liberal Democratic Party and Komeito) on 10 December 2020 agreed to an outline of tax reform proposals for 2021.


Among the tax reform proposals included in the outline are provisions regarding: 

  • Corporate tax
    • Measures for promoting investment in digital transformation
    • Measures for promoting investment in carbon neutrality
    • Measures for tax losses carried forward
    • Tax credits for research and development (R&D) expenses
    • Measures for promoting corporate transformations (M&A) using a corporation’s own shares
  • International tax
    • Relaxed requirements for the deduction of compensation paid to directors
    • Changes to inheritance tax and gift tax levied on overseas properties of “foreign talent”
    • Clarification of income tax treatment of distributions of profit received by fund managers
  • Tax administration
    • Changes to the requirement for using a seal on tax-related documents
    • Application forms provided for tax treaty purpose, etc., allowed to be submitted electronically
    • Expansion of tax agent system

Read a December 2020 report [PDF 367 KB] prepared by the KPMG member firm in Japan

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