Japan's 2012 tax reform proposals include earnings stripping rules

February 2012


On December 10, 2011, the Japanese Cabinet released the 2012 tax reform proposals, which include new earnings stripping rules that would limit the deductibility of related party interest expense. The Diet (parliament) will discuss the annual tax reform legislation and it is expected to take effect April 1, 2012. The new earnings stripping rules discussed below are scheduled to be effective for tax years beginning on or after April 1, 2013.

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