Japan to tighten taxation on rich emigrants
The government and ruling coalition have agreed to consider tightening taxation on rich people who leave the country to live abroad for the purpose of avoiding inheritance and gift taxes, informed sources said Friday.
This will be included in a fiscal 2017 tax system reform package, slated to be adopted in December, the sources said.
The maximum tax rate of 55 percent is imposed on inheritances of over ¥600 million. Meanwhile, some other countries and regions levy much lower inheritance taxes or have no such tax.
Singapore, Australia and Hong Kong are among the popular destinations for rich Japanese people seeking settlement to avoid inheritance taxes.
Under the current system in Japan, overseas assets are not subject to inheritance tax if both their original owners and recipients have lived abroad for over five years.
The government and the ruling bloc plan to review the five-year rule, with a view to raising the hurdle to 10 years. At the same time, they will consider giving exemptions for those moving out of Japan for reasons other than tax avoidance.
Inheritance tax rules for foreigners living in Japan will also be reviewed, according to the sources.
Currently, overseas assets of foreign residents may be subject to Japanese taxation even if they are inherited by relatives living abroad.
As the rule is seen as a factor discouraging highly skilled foreign nationals from working in Japan, the government and the ruling bloc will study exempting overseas assets of nonpermanent foreign residents from inheritance tax, the sources said.