Japan
| Category | Rank | Score |
|---|---|---|
| Overall Rank | 24 | 61.53 |
| Corporate Taxes | 36 | 35.27 |
| Individual Taxes | 21 | 57.36 |
| Consumption Taxes | 3 | 94.55 |
| Property Taxes | 26 | 50.09 |
| Crossborder Taxes | 27 | 69.08 |
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