Post by Stevenson on Jan 14, 2009 0:37:20 GMT 4
Japan proposes cut to capital gains tax to lure foreign investment
David Stevenson
The Japanese government is considering scrapping capital gains tax for foreigners who invest in the country's companies through funds in a bid to attract more foreign investment.
If a foreign corporation invests in Japanese companies through an investment fund, capital gain derived from such investment is taxed in Japan at 40%.
According to Reuters, foreign investors make up around 4% of fund investment in Japan, compared to 75% in the UK and 20% in the US.
"It is assumed that the capital gain taxation at a higher rate is one of the reasons why the investment into Japan through an investment fund has not been increased. In order to facilitate the investments into Japan, capital gain for certain foreign investors will be exempt from taxation in Japan," said Akio Takisaki country tax leader at Ernst & Young in Japan.
To qualify for the proposed exemption, funds must have held a stake in a Japanese company for at least 12 months. Foreign investors with holdings of 25% or more will not be eligible.
A bill containing the proposal will be presented to parliament before the end of its current session. If the revision is approved, the change will be effective from April this year.
David Stevenson
The Japanese government is considering scrapping capital gains tax for foreigners who invest in the country's companies through funds in a bid to attract more foreign investment.
If a foreign corporation invests in Japanese companies through an investment fund, capital gain derived from such investment is taxed in Japan at 40%.
According to Reuters, foreign investors make up around 4% of fund investment in Japan, compared to 75% in the UK and 20% in the US.
"It is assumed that the capital gain taxation at a higher rate is one of the reasons why the investment into Japan through an investment fund has not been increased. In order to facilitate the investments into Japan, capital gain for certain foreign investors will be exempt from taxation in Japan," said Akio Takisaki country tax leader at Ernst & Young in Japan.
To qualify for the proposed exemption, funds must have held a stake in a Japanese company for at least 12 months. Foreign investors with holdings of 25% or more will not be eligible.
A bill containing the proposal will be presented to parliament before the end of its current session. If the revision is approved, the change will be effective from April this year.