TOKYO -- Japan is considering reducing income tax to attract international talent in the financial sector, said Yasutoshi Nishimura, minister in charge of fiscal policy and economic revitalization, on Wednesday.
To lure international asset management companies and talent in the financial sector, Japan would "consider treating part of investment profits as financial income," said Nishimura in a session at the Nikkei event "International Financial Hub -- Japan’s Role." The new policies would be included in the 2021 tax reform outline, to be drafted this month.
When fund managers invest in funds, it was previously not clear whether profits were financial income or business income. Japan’s ruling party, the Liberal Democratic Party, and the government are expected to propose a 20% tax rate for financial income in the new tax revision outline. Currently, business incomes are subject to a higher income tax of up to 55%.
Prime Minister Yoshihide Suga’s administration hopes to create an international financial hub in Japan as political uncertainties loom in Asia’s current financial center, Hong Kong. The event focused on the theme was held in Tokyo as part of the Nikkei Virtual Global Forum.
"Japan has the potential to become an international financial hub, with enough assets and a stable living environment, but [the potential] has not been utilized," said Nishimura. He suggested he would propose measures needed to "make better living conditions for foreigners and simplify administrative processes."