Japan Tax Reform Requests Focus on Growth Investments

Tokyo, Aug. 31 (Jiji Press)–Japanese government agencies and ministries have submitted their tax system reform requests for fiscal 2027, including measures aimed at realizing a strong economy as advocated by the administration of Prime Minister Sanae Takaichi, such as spurring companies’ growth investments. A tax reform package for the fiscal year starting next April will be compiled at the end of this year following examinations of the requests by the tax panels of the government and the ruling parties. The industry ministry sought the establishment of a system to defer corporate tax payments on business sale profits. The system will be designed to help companies increase cash reserves during business reorganization and back up their growth investments through new business acquisitions using the funds. To support Tokyo-based Rapidus Corp., which aims to start mass-producing cutting-edge semiconductors, the ministry asked for tax relief for in-kind contributions, in which government-owned assets, such as factories, are exchanged for shares in the company. The existing tax system for business succession, which grants gift and inheritance tax relief, may be thoroughly revamped to promote corporate capital spending in order to enhance the earning power of small companies. A request was made to extend for three years the tax measure aimed at facilitating wage increases, currently set to expire at the end of fiscal 2026, and to review the eligibility criteria to encourage further wage increases. The industry ministry, welfare ministry and the Children and Families Agency jointly requested the introduction of tax incentives for individuals using housework helpers and babysitters, as part of measures to secure labor force by preventing people from quitting their jobs due to child-rearing and nursing care responsibilities. The Children and Families Agency also called for preferential tax treatment for companies that support child-rearing employees. Meanwhile, the agency sought to abolish at the end of fiscal 2026 the gift tax exemption for lump-sum funds given to people by their grandparents and others for marriage and child-rearing. The Finance Ministry and the Financial Services Agency asked for tax benefits for Japanese government bonds for individual investors to help ensure stable bond placements. The FSA proposed a measure to facilitate the use of stablecoin, a type of crypto asset, in high-value payments. The land ministry sought a measure to curb speculative transactions as part of efforts to tackle soaring prices of new condominiums. The Environment Ministry requested an exemption on hunting tax paid by hunters, following a series of bear attacks across the country. END [Copyright The Jiji Press, Ltd.]