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Japan doesn’t seem to want long-term residents anymore. Why would you do that at a time when you’re doing Tokyo as an international financial center?

21 Comments

Paul Hunter, secretary general of the Tokyo-based International Bankers Association which represents about 50 overseas financial institutions and has been lobbying against a rule by which the government subjects long-term foreign residents to inheritance tax of up to 55% on their worldwide assets — meaning heirs could be forced to give up their family homes or businesses even if they’ve never set foot in Japan.

© Bloomberg

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21 Comments
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Has this foreign residence inheritance tax actually been enforced on anyone yet, or is it just some ridiculous concept to keep foreigners from staying, conjured up by some out of touch listless bureaucrat?

3 ( +4 / -1 )

End of the day fact of the matter is that many older people hold rather black and white xenophobic views toward any foreigners. They want you in for awhile, do your job, then please go back.

Even mixed blood Japanese like me cannot be fully accepted.

The young generation are apathetic as a group, do not challenge the status quo, and need their wealthier parents to survive.

4 ( +5 / -1 )

Japan doesn’t seem to want long-term residents anymore.

When have they ever?

7 ( +7 / -0 )

Since Japan cut the corporate income tax, the authorities are snooping around to create new avenues of revenue, a tax accountant told me a couple of years ago. He told me to be very careful, because they'll be ramping up ways of squeezing regular folks to recoup the $$$ corporations no longer have to pay.

Welcome to "Third Arrow" reform. Rich, greedy corporations, poor people.

3 ( +5 / -2 )

Don't be a hermit nation, Japan.

We love you.

-2 ( +2 / -4 )

Well the issue here is that Japanese citizens are themselves subject to a worldwide inheritance tax on overseas assets, so essentially they are treating long term residents in Japan the same as Japanese citizens.

I don't necessarily see this as a bad thing otherwise long term foreign residents would have an incentive to move assets overseas instead of keeping in Japan. This would also put them at a tax advantage over Japanese citizens, which is anathema and nonsensical and would likely trigger a backlash against foreigners in Japan. Therefore this is a rational tax move

-2 ( +4 / -6 )

Why would you tell the Japanese tax authorities about your assets in other countries?? Got to be crazy to do so.

0 ( +0 / -0 )

No foreigner in Japan would tell the tax authorities about assets or inheritances they have in other countries. Screw that. Why should they get their hands on funds which have nothing to do with Japan?? As said above, they just give away all taxpayers money anyway.

2 ( +3 / -1 )

Why would you tell the Japanese tax authorities about your assets in other countries?? Got to be crazy to do so

If you've got a My Number then that's your Tax Identification Number. In the case of the UK it means that the Japanese Tax office will have information on your British bank account and any payments into it. They can then charge you tax on it.

1 ( +4 / -3 )

@Alfie

But surely you can only be taxed on income that you bring into Japan?

An English bank account doesn’t count, if you leave the loot there?

Not that I’m affected by the problems of the wealthy....

3 ( +4 / -1 )

In the case of the UK it means that the Japanese Tax office will have information on your British bank account and any payments into it.

This is not correct. They will not have information on a bank account you hold in the UK. Rest easy, Brits in Japan.

3 ( +4 / -1 )

Japan should eliminate inheritance tax altogether.

It's an unproductive burden on Japanese society. I think this morning I saw a commercial on TV advertising some service to help dealing with inheritance tax. 

People have better things to do with their time and money than this.

Eliminate this tax, so that people can just get on with their lives, rather than seek/provide services to help find loopholes through the system. 

Especially when a loved one has passed away, having such a burdensome system in place is cruel and inhumane.

This tax generates so little revenue that it doesn't even appear in the budgeted revenues of the government as it's own item (presumably it counts as "others"):

http://www.mof.go.jp/english/budget/budget/fy2017/01.pdf

Welcome to "Third Arrow" reform. Rich, greedy corporations, poor people.

No, the existence of the inheritance tax is indicative of a lack of 3rd arrow reform, not the result of it.

Countries around the rest of the world are moving in the direction of abolishing death taxes, Japan stands virtually alone in not only not moving to abolish it, but increasing the rates.

0 ( +2 / -2 )

Japan should eliminate inheritance tax altogether. exactly the inheritance tax is just double taxation, effectively taxing you twice on money earned, pushing most people over the 50% threshold. it is almost slavery when you pay more tax than you earn during your life time. I can guarantee you one thing the j gov wont get a yen from me when I die, it will either be already spent or donated to charity in a foreign country on the day of my death. its not a matter of the tax its a matter of principle.

2 ( +2 / -0 )

No foreigner in Japan would tell the tax authorities about assets or inheritances they have in other countries. 

You're required to in your tax return. "Income from foreign sources."

0 ( +1 / -1 )

"Income from foreign sources."

Is it income if it stays abroad?

pushing most people over the 50% threshold

You must move in wealthy circles. Most of the people I know would be nowhere near the 50% threshold. You would have to hit an inheritance of 600 million yen per inheritor (after subtraction of allowances) before you were paying 50% inheritance tax.

-2 ( +0 / -2 )

The reasons for this change in taxation were more about catching wealthy Japanese who move their assets overseas. Some even took up foreign citizenships to avoid the tax. Thats why we are now unfortunately also targeted.

2 ( +2 / -0 )

Is it income if it stays abroad?

Yes.

1 ( +1 / -0 )

@lucabrasi

I got the info from here:

http://www.retirejapan.info/blog/international-tax-reporting#comments

A friend of mine had this very same thing happen to him recently. However, reading through the comments section, the comments from 'former expat' indicate it may not be the case, in actual fact.

0 ( +0 / -0 )

The only income I have from foreign sources is the paltry interest in my bank account back home. And I already have to pay taxes on that. Not that I have that much assets, but why the heck should I tell the Japanese government about something that doesn't concern them, especially if these were all gained before coming to Japan?

It seems that Japan treats foreigners as Japanese when it comes to taxes and emptying your wallet, but puts foreigners in their place in all other situations.

Sick and tired of foreigners being made the scapegoat whenever the Japanese themselves do something wrong, be it putting out the wrong garbage, stealing bicycles or shifting money overseas. Don't like Japanese taking up foreign citizenship - well, just take their Japanese citizenship away then. Stop taking it out on foreigners who don't, won't or can't get Japanese citizenship.

0 ( +0 / -0 )

Is it income if it stays abroad?

If you're earning income, regardless of the source or where it is kept, and your tax jurisdiction is Japan, you are required to report that income to Japanese tax authorities.

2 ( +2 / -0 )

To be precise (if I have this right), you are expected to report it if the sum of your income that is not taxed at the source (e.g. wage income) is upwards of 200,000 yen for the year.

If you are under 200,000 then you are not expected to file a kakutei shinkoku for it, but if you do file a kakutei shinkoku for other reasons, then even if it is under 200,000 you are supposed to report it.

0 ( +0 / -0 )

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