Income Tax Relief On Japanese Shares Is Extended For Another Year

Income tax relief on shares listed in Japan has been extended for one more year, and non residents will enjoy the tax exemption for the municipal bonds at JASDEC from January 1, 2008. The Special Taxation Measurers law Article 9

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Income tax relief on shares listed in Japan has been extended for one more year, and non-residents will enjoy the tax exemption for the municipal bonds at JASDEC from January 1, 2008.

The Special Taxation Measurers law Article 9-3 has temporally reduced the income tax on dividends for listed shares until March 31, 2008. The new law will extend the date until March 31, 2009.

Non-resident investors will continue to pay 7 percent income tax, while resident investors will continue to pay a 10 percent tax (7 percent income tax + 3 percent local tax) as at present.

In addition, the capital gain tax on listed equities, which is imposed to resident investors, has been reduced to 10 percent (7 percent income tax + 3 percent local tax). Its tax relief will be extended until Dec. 31, 2008, though this extension will not have any impact on non-residents who were not affected by the capital gain tax in Japan.

“The new tax exemption scheme has been officially introduced to the municipal bond market from January 1, 2008,” a Mizuho Bank spokesperson said in a statement. “After the conversion of corporate bonds from the registered form to the JASDEC book entry, the withholding tax on the interest income from the book-entry municipal bonds at JASDEC will be exempted provided the Tax Exemption Application Form (currently utilized fro JGB) is submitted.”

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