Japan: Outline of 2026 tax reform proposals, including amendments to Pillar Two rules
Proposals affecting corporate, international, consumption, and individual tax
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january 8, 2026
The ruling governing coalition on December 19, 2025, agreed to an outline of tax reform proposals for 2026.
The outline is only indicative of the agreement, and the details of some contemplated changes are not certain. In addition, the final tax reform could differ from the outline depending on the outcome of the legislative process.
The tax proposals in the tax reform outline include:
- Corporate tax
- Special measures for promoting investment in specified productivity-enhancing facilities
- Tax credits for research and development (R&D) costs
- Tax credits for promotion of salary increases
- Restriction on eligible companies for special tax measures
- Special measures for promoting domestic production in strategic fields
- Special measures for promoting open innovation
- Special measures for preparation and preservation of documents related to transactions within corporate groups
- International tax
- Amendments to global minimum tax rules to reflect January 2025 OECD administrative guidance
- Controlled foreign company (CFC) regime
- Special measures for foreign partners of investment funds
- Consumption tax
- Taxation on cross-border electronic compliance
- Taxation on services related to real estate located in Japan
- Individual tax
- Individual (personal) reliefs
- Tax measures to secure financial resources for strengthening defense capability (special defense income tax)
- Fair tax burden on extremely high-level income
- Cryptoassets
Read a December 2025 report prepared by the KPMG member firm in Japan