Japan's Finance Minister Calls For Early Cut In Capital Gains Tax

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

30 May 2001

Japanese Finance Minister, Masajuro Shiokawa, announced this week that he wants to implement a simplified system of capital gains taxes on stock sales at an earlier date than originally planned. During a meeting with the Lower House of Representatives Budget Committee, Mr Shiokawa said: 'I don't think things should be left as they are ... the plan is to do it in two years but, if possible, I would not mind if the schedule for the tax rate cut is moved forward.'

Currently, stock investors in Japan are given the choice of either paying a withholding tax of 1.05 per cent on share sale values, regardless of whether or not they have gained or lost profits, or investors can pay 26 per cent on the total of their capital gains accrued in one year.

Originally due to be scrapped by the end of March this year, the withholding tax option was extended for a further two years because the coalition government was worried that it could deter some investors from investing in the stock market.

The parties within the coalition - the Liberal Democratic Party, New Komeito and the New Conservative Party - have come to an agreement under which the capital-gains tax rate will be cut to 20 per cent from the current 26 per cent.

Recommended