Tax Code Relaxed in Japan

Japan’s government has changed its tax code in a bid to encourage foreign capital to be invested in the nation’s economy. Ministers have reformed the tax rules relating to offshore asset managers and hedge funds by dropping their obligation to be classified as having a ‘permanent establishment’ in the country. Effectively, this means that the firms are currently being taxed twice, both domestically and in Japan, for investing in the economy – a requirement which has now been swept away. The move has been designed primarily to stimulate growth at a time in which the nation is facing a declining population and the ongoing effects of the credit crunch. A spokesman at Japan’s Financial Services Agency said: “We must admit that Tokyo’s presence in international finance has been in decline for some years.”

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