2017 Tax Reform - Japanese Anti-Tax Haven (CFC) Regime | KPMG | JP

2017 Tax Reform - Japanese Anti-Tax Haven (CFC) Regime

2017 Tax Reform - Japanese Anti-Tax Haven (CFC) Regime

The ruling coalition (the Liberal Democratic Party and New Komeito) agreed on the ‘Outline of the 2017 Tax Reform Proposals’ (‘Proposal’) on 8 December 2016.

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Under the 2017 tax reform, the Japanese CFC regime will be extensively amended in light of the final report of Action 3 (Designing Effective Controlled Foreign Company Rules) of the Base Erosion and Profit Shifting (BEPS) Project, which was released by the Organisation for Economic Co-operation and Development (OECD) on 5 October 2015.

We have set out in this newsletter the main points of the amendments to the Japanese anti-tax haven (CFC) regime indicated in the Proposal.

Contents

Background

Key Points of Amendments

  1. Overall Picture of CFC Regime
  2. Foreign Related Company
  3. Taxpayers
  4. Definition of Paper Company, etc.
  5. Exception Tests/Economic Activity Tests
  6. Income Subject to Full-Inclusion Rules
  7. Passive Income
  8. Passive Income Inclusion Rules
  9. Other Points
  10. Timing of Application

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