Japan

Japan's Rankings
CategoryRankScore
Overall Rank2857.06
Corporate Taxes3632.8
Individual Taxes3250.32
Consumption Taxes395.35
Property Taxes3048.16
International Tax Rules2170.84

Japan ranks 28th overall on the 2019 International Tax Competitiveness Index, the same as in 2018.


Strengths

  • Japan has a low VAT rate of 8 percent applied to a broad base.
  • Corporate and consumption taxes are less complex than they are on average in the OECD.
  • Japan's personal income tax rate on dividends is 20.3 percent, below the OECD average of 23.8 percent.

Weaknesses

  • Japan has poor cost recovery provisions for business investments in machinery and buildings.
  • Japan has a hybrid international tax system with a 95 percent exemption for foreign dividends and no exemption for foreign capital gains.
  • Companies are severely limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income.

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