Japan

Japan's Rankings
CategoryRankScore
Overall Rank2461.53
Corporate Taxes3635.27
Individual Taxes2157.36
Consumption Taxes394.55
Property Taxes2650.09
Crossborder Taxes2769.08

Japan ranks 24th overall on the 2021 International Tax Competitiveness Index, one place worse than in 2020.


Strengths

  • Japan has a low VAT rate of 10 percent applied to a broad base.
  • Corporate and consumption taxes are less complex than they are on average in the OECD.
  • Japan's personal income tax rate on dividends is 20.3 percent, below the OECD average of 24.1 percent.

Weaknesses

  • Japan has poor cost recovery provisions for business investments in machinery and buildings.
  • Japan has a hybrid international tax system with a 95 percent exemption for foreign dividends and no exemption for foreign capital gains, while many OECD countries have moved to a fully territorial system.
  • Companies are severely limited in the amount of net operating losses they can use to offset future profits.

Learn more about the tax system in Japan

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