Japanese MoF Outlines Key Tax Reforms For 2009

by Mary Swire, Tax-News.com, Hong Kong

16 January 2009

Japan's Ministry of Finance has unveiled several key tax reforms which are due to be put in place during fiscal year 2009, according to an official document released by the Finance Ministry.

According to the MoF, the 2009 tax reforms "will take appropriate measures regarding taxation of housing and land, taxation of corporations, taxation of SMEs, inheritance taxation, taxation of financial and securities transactions, international taxation, and motor vehicle taxation."

Housing

• Extension of the tax credit relating to housing loans by 5 years;
• Introduction of special tax deductions up to the sum of JPY10m with regard to the profit gained from the sale of land purchased in 2009/2010 after the ownership of said land for at least 5 years; and
• Introduction of measures to allow tax deferral of a part of profit gained from the sale of land which corporations sell within 10 years after purchase of said land in 2009 or 2010.

Financial And Securities Transactions

• Extension of the application of the current reduced tax rate of 7% for dividends and capital gains on listed shares by 3 years;
• Creation of a package of simple tax incentives to try and encourage small investments in the FY 2010 tax reform; and
• Introduction of insurance premium deductions for long-term care and medical care as a new tax relief for life insurance premiums in the FY 2010 tax reform.

SMEs

• Temporary lowering of the reduced corporate tax rate for SMEs from 22 to 18% for 2 years, and
• Removal of the suspension of the refund system relating to net loss for SMEs.

Elsewhere, other notable changes to the tax system will also take place, according to the MoF. With regards to corporate tax, the MoF is planning to introduce a two-year tax measure allowing corporations a tax rebate for the purchase of energy-saving office facilities.

Plans have also been revealed to temporarily reduce the tax levied on automobiles which have passed higher environmental standards, and lastly, a two-year extension will be given to the filing of certain online tax returns.

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