Japan’s ruling Liberal Democratic Party (“LDP”) seems to have begun considering extending the expiration of the advantageous withholding tax rate of 7% by one year in view of the fragile sentiment prevailing in the stock market.
Presently, 7% withholding tax rate applies when foreign investors receive the dividends of the stocks listed in Japan. The special tax rate was introduced to buoy the then stock market in January 2004, and the advantageous withholding tax rate is scheduled to terminate in March 2009.
The leading LDP members such as Mr. Tsushima, Chairman of the LDP’s Research Commission on the Tax System and Mr. Hori, Chairman of the LDP’s Policy Research Council are seemingly considering extending the expiration of the special withholding tax rate for the dividends of listed stocks by one year in light of the recent financial turmoil in the world market.
Although the Tokyo stock market rebounded steeply yesterday, market participants are still afraid that the Tokyo stock market has not regained its health or strength yet.
D.C.