The government blinked

You may remember we were talking about the inheritance tax reforms last year. Basically short-term residents (under ten years, working visa) were not liable for inheritance tax on estates outside Japan. At the same time long-term residents (over ten years, spouse or PR visa) became liable to pay Japanese inheritance tax for up to five years after leaving Japan.We wondered how that might be enforced, and lots of expats complained bitterly about the new rules.

Well, it seems like the government blinked.

David Wagner posted a link to this article on Twitter. Basically the five years after leaving Japan will no longer apply, unless you are trying to game the system somehow. Nice face-saving solution for everyone. For more info on this topic, read our guide to inheritance tax in Japan.

The article also mentions a small change to how income tax is calculated (the basic deduction is going up while salary deductions are going down) and the introduction of a new ‘leaving the country’ tax, for the Olympics (this can be currently used to justify any new policy in Japan, of course) of 1,000 yen each time you leave the country (tourists and residents).

More on the domestic changes here. The consensus seems to be that highly paid employees will pay more tax and freelancers (self-employed, small business owners, etc.) will pay a bit less.

I guess it’s a small net positive all round. Have a nice weekend!

3 Responses

  1. How would they define proof of “gaming the system”? I mean, if you aren’t living in Japan, what would that criteria look like?

    1. I presume it’s something like leaving Japan, receiving a large inheritance, and then coming back again (the reason they wrote that law in the first place). Nothing to worry about for ordinary people.