TOKYO -- The Japanese government and ruling coalition on Tuesday entered into final talks to create a new type of investment account that is tax free for 20 years, a move aimed at spurring more retail investors to buy stocks for the long term.
Individuals will be able to invest up to 400,000 yen ($3,510) a year during the period without paying taxes on capital gains or dividends. These accounts, to be created under the so-called NISA program, will be included in the ruling coalition's fiscal 2017 tax reform outline due out Thursday and will likely become available in January 2018. Investors will be able to choose between these and the existing 5-year NISA accounts.
The Ministry of Finance had previously pushed for a 10-year exemption with a 600,000 yen annual investment cap. Some in the ministry and the ruling Liberal Democratic Party's tax research commission were hesitant on granting a longer tax break.
But Financial Services Agency Commissioner Nobuchika Mori convinced the ruling coalition to adopt a 20-year exemption at a closed-door meeting on Tuesday, citing such benefits as a higher return on investment.
Existing NISA accounts have a 1.2 million yen annual cap with a five-year exemption. Though over 10 million accounts had been opened as of March-end, over half are idle and few hit the annual investment limit. The new scheme is designed to encourage more individuals to invest their savings.