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.

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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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