The Japanese controlled foreign company (CFC) regime is used to include income generated by a CFC in its Japanese parent company’s income, and to subject this income to tax in Japan in the hands of the Japanese parent company under certain conditions. This is intended to deter tax avoidance by entities using CFCs.
Under the 2017 tax reform, the Japanese CFC regime has been extensively amended in light of the final report of the OECD’s base erosion and profit shifting (BEPS) Action 3 (Designing effective controlled foreign company rules).
Read a July 2017 report [PDF 347 KB] prepared by the KPMG member firm in Japan
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