Japan: Update on 2021 tax reform legislation

Japan: Update on 2021 tax reform legislation

The 2021 tax reform bills were passed on 26 March 2021 by the Japanese National Diet.


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The tax reform legislation includes the following corporate tax measures:

  • Incentives for promoting investment in digital transformation
  • Incentives for promoting investment in carbon neutrality
  • Measures concerning tax loss carryforwards
  • Tax credits for research and development (R&D) expenses
  • Measures for promoting mergers and acquisitions using a corporation’s own shares

An international tax provision in the tax reform legislation would relax the requirements for deduction of directors’ compensation and would amend the inheritance tax and gift tax levied on overseas property of “foreign talent.”

The legislation also includes provisions intended to improve tax administrative matters.

Read a March 2021 report [PDF 273 KB] prepared by the KPMG member firm in Japan

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