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Japan Plans For Eco-Vehicle Tax Cuts Revamp

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

25 December 2014


The Government is proposing to introduce a tax break for eco-friendly minivehicles, within an extension and restructuring of Japan's tax package for fuel-efficient vehicles, to apply in the next fiscal year from April 1, 2015.

The proposal is to reduce the light motor vehicle tax applicable to "kei cars," which have an engine size of 660 cc or less and a maximum passenger capacity of three, and are a specialist light vehicle designed to comply with Japanese government tax and insurance regulations. Motorcycles with engine sizes between 125 cc and 250 cc would also be included.

This tax cut would, it has been suggested, be part of the annual extension to the current Japanese tax package for fuel-efficient vehicles, which includes reductions of between 50 percent and 70 percent for purchasers of passenger cars, and acquisition and weight tax exemptions or reductions.

However, it is likely that, at the same time, the fuel efficiency required in 2015 to apply for tax breaks will be tightened by subjecting vehicles to improved 2020 fuel economy standards, so as to narrow down the vehicles covered.

The Government and the two ruling parties, the Liberal Democratic Party and Komeito, are presently finalizing the tax measures that are to be included in the Budget for next year, which should be announced by the end of December.

TAGS: environment | tax | tax incentives | energy | vehicle tax | law | manufacturing | tax breaks | standards | regulation | Japan

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