Japan: Proposed reduction in effective tax rate exemption threshold under CFC regime

Outline of the proposal and possible effect of the proposal on deferred tax accounting

Outline of the proposal and possible effect of the proposal on deferred tax accounting

The tax reform proposals for 2023—agreed to by the ruling governing coalition on 16 December 2022 (read TaxNewsFlash)—include a reduction in the exemption threshold of effective tax rate for full-inclusion rules applied to the specified controlled foreign company (CFC) under the CFC regime to 27% (from 30%).

Read a March 2023 report [PDF 676 KB] prepared by the KPMG member firm in Japan that provides an outline of the proposal and explains the possible effect of the proposal on deferred tax accounting for the fiscal year ending on or after 31 March 2023.

 

 

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