Japan to review employment income deduction system


The government and the ruling bloc plan to review the employment income deduction system as part of tax reform for fiscal 2018, according to Yoichi Miyazawa, tax chief of the Liberal Democratic Party.

Miyazawa told a new conference Monday that the review will be conducted amid an increasing number of nonregular workers and for the purpose of encouraging older people and women to work, adding that work styles are diversifying.

Miyazawa noted that income deduction levels in Japan are high compared with other countries.

“We hope to reach a reasonable conclusion (for the review),” Miyazawa said, expressing willingness to cut deduction amounts for high earners.

In a related development, the government and the LDP-led ruling coalition started discussions Monday to “drastically review and improve” the business succession tax system, so the payment of succession tax can be postponed to help small businesses with aging owners, informed sources said.

Setting up a 10-year special period from fiscal 2018, the government will focus on support for business succession. Requirements for tax breaks, such as maintaining a certain number of employees, will be eased, according to the sources.

“We will radically move forward with a generational change in the 10 years,” Miyazawa said at the news conference, indicating that related measures will be included in the fiscal 2018 tax reform package, set to be drawn up in December.