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  • Service: Tax, International Corporate Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 12/12/2012

Japan - Withholding under “special reconstruction” tax laws effective 2013 

December 12:  Tax withholding provisions under 2011 earthquake-related legislation (known in English as the “special reconstruction income tax”) are effective 1 January 2013.

Japanese and foreign corporations are also liable for a “special reconstruction corporation tax.”


The new taxes were introduced under the “Act on Special Measures for Reconstruction Funding after the 11 March 2011 Earthquake” as enacted in December 2011.

Special reconstruction income tax

The “special reconstruction income tax” is imposed on individuals and on companies at a rate of 2.1% for a 25-year period (from 2013 through 2037).


Withholding agents that withhold income tax at source also must withhold the “special reconstruction income tax.” There are rules for determining the amounts to withhold. When a reduced withholding tax rate (including exemptions) is available under a tax treaty, the “special reconstruction income tax” will not be imposed.


Read a December 2012 report [PDF 159 KB] prepared by the KPMG member firm in Japan: Special Reconstruction Income Tax

Special reconstruction corporation tax

Both Japanese and foreign companies are liable for the “special reconstruction corporation tax.” In general, this tax is 10% of the Japanese corporation tax liability (subject to certain special rules) for a fiscal year during the applicable period.


The applicable period is all fiscal years with days falling within a three-year period from the first day of the first fiscal year that commences in the period from 1 April 2012 through 31 March 2015.


Read a December 2012 report [PDF 183 KB] prepared by the KPMG member firm in Japan: Special Reconstruction Corporation Tax





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