Meta Data

Draft:

Revision of previous policy?:

Draft Year:

2015

Effective Start Year:

2016

Effective End Year:

2017

Scope:

National

Document Type:

Other

Economic Sector:

Transport, Multi-Sector

Energy Types:

Gas, Other

Issued by:

Ministry of Finance

Source:

Web Archiving Project (WARP)

File:

FY2016 Tax Reform (Main Points)

Overall Summary:

In light of the current economic situation etc., the government will implement the growth-oriented corporate tax reform, etc. from the viewpoint of securing the realization of virtuous economic cycle, and will introduce the reduced tax rate system for consumption tax in line with the consumption tax increase with consideration given to low income earners. At the same time, the government will also address the measures for the declining birthrate and educational reform as well as overcoming Population Decline and Vitalizing Local Economy, while taking tax measures to refurbish international taxation rules into ones suitable for the global business model. Moreover, tax measures to support reconstruction after the Great East Japan Earthquake will also be taken. Specific tax reform measures are shown below.

Environment

Decarbonization strategy:

Revision of automobile tax ・In line with consumption tax hike to 10% in April 2017, automobile acquisition tax will be abolished, while tax proportionate to environmental performance will be introduced concerning automobile tax and light automobile tax to maintain and enhance the eco-friendly function. ・Revision and extension of the special measure (reduced tax burden for eco-friendly cars) concerning automobile tax and light automobile tax, which is to be applied in FY2016.

Pricing

Energy taxation:

Technology

Clean energy technology deployment:

Full Document Text

FY2016 Tax Reform (Main Points)

^{_{(Cabinet decision on December 24, 2015)}}

Individual income taxation

○ Introduction of a special deduction system for capital gains from the sale of vacant houses

・A special deduction system (30 million yen) will be introduced for capital gains for the cases where an inherited vacant house only meets the old earthquake proof standards and the successor sells the house or property after conducting necessary anti-seismic renovation or demolition of the house.

○ Introduction of a tax deduction system concerning renovation for houses to accommodate three generations.

・A tax deduction system will be introduced concerning the renovation of houses that accommodate three generations using a loan or self-financing (loan: 1–2% of the outstanding mortgage as of the end of fiscal year / self-financing: 10% of the value equivalent to the standard construction costs).

○ Introduction of deduction for switch OTC drugs (special measures for medical expenses deduction)

An income deduction system for promoting self-medication (a special measure concerning the calculation of medical expenses deduction) will be introduced concerning the purchase of switch OTC drugs (amount exceeding 12,000 yen per year) for individuals who receive health checks, vaccinations, etc.

○ Comprehensive revision of the tax system for private donations

・A tax deduction system will be introduced concerning private donations used for student support programs by national university corporations, etc.

・Regarding public interest corporations, the requirements concerning the number of donors for tax deductions concerning private donations will be eased according to the size of the project.

○ Growth-oriented corporate tax reform

・Reduction of the corporate tax rate,etc.

	FY2015
Corporate tax rate	23.9%
Enterprise tax proportionate to the income level*	6.0%
(Reference) Effective corporate tax rate (national and local tax)	32.11%

FY2016 and 2017	FY2018
23.4%	23.2%
3.6%	3.6%
29.97%	29.74%

⇒

*Includes local special corporate tax until FY2016

・Expansion of tax base,etc.:

— Revision of special tax measures concerning taxation (as shown below)

— Revision concerning depreciation (the depreciation method for equipment and structures affixed to buildings is unified with the straight-line method)

— Additional revision of the deduction of losses carried forward (maximum amount of deduction for large corporations: (FY2016) 65% of income ⇒ 60% of income; (FY2017) 50% of income ⇒ 55% of income)

— Further expansion of pro-forma standard taxation for enterprise tax (currently (FY2015) three-eighths ⇒ (FY2016) five-eighths)

○ Revision of special tax measures

・The scale-down and abolishment of the tax system to promote investment in facilities to improve productivity. (Currently: immediate depreciation, etc. ⇒ (FY2016) Special depreciation rate: 50%,etc. ⇒ (FY2017) Abolished (clarified in the FY2016 tax reform bill)

・Revision of the tax system to promote environment-related investments (exclusion of solar power generation facilities for the purpose of selling electricity, etc.)

・Revision of the employment promotion tax system (limitation of subject areas and subject types of employees). Other measures will also be taken;and others.

○ Correction of unevenness in local corporate taxation (from FY2017)

・Reduction of corporate inhabitant tax proportionate to corporate tax and reduction of local corporate tax

・Abolishment of local special corporate tax and special corporate transfer tax

・Establishment of the corporate enterprise tax grant

○ Establishment of the tax system to support regional revitalization (home town tax for companies)

・Provided that the Local Revitalization Act is revised, a tax deduction system will be introduced concerning donations related to certain projects listed in a plan certified under the Act that are conducted by local governments.

○ Tax measures to support reconstruction

・The special depreciation system and tax credit system for acquisition of machines, etc. in the areas where reconstruction industries accumulate will be revised. At the same time, the applicable period of the system will be extended for five years (in addition, some requirements will be relaxed based on the actual situation of the affected areas). Other measures will also be taken.