What on earth are they thinking? New legislation designed to deter Japanese tax evaders will also effect non-Japanese long-term and permanent residents in profound ways. It's a game changer, folks.
Wealthy Japanese have increasingly been moving overseas to avoid paying taxes in Japan. This is not a new issue. What is new is legislation released on December 8, 2016 as a response to the problem. (1) Based on proposed amendments (to be voted on in March 2017), the receipt or transfer of worldwide assets held by long-term residents of Japan will be subject inheritance and gift tax for up to 10 years AFTER departing Japan. Yes, you read that right...you have to have not lived in Japan for 10 years to not be taxed on inheritance or gifts from an estate. And the onus falls on the recipient, not the giver. Time to rethink that plan of staying in Japan? You bet.
But wait....it gets better. Depending on the amount of inheritance, you may technically be taxed at the rate of 55%. Gulp.
So I am asking myself the following question: Why would anyone want to live in Japan more than few years? Oh...I have a second question: Have the Japanese bureaucrats and politicians who drafted this revision to the law lost their minds?
One hundred years from now (depending of which statistical analysis you like), Japan's population moves from roughly 127,000,000 now to 40,000,000...a drop of two-thirds. Who the heck is going to keep the pension scheme alive? Who is going to provide the tax revenue to keep society functioning? And who is going to fill the jobs needed in Japan? Answer: Non-Japanese. But who will want to live in Japan long-term with a 55% maximum tax rate on inheritance? I can't think of any.
I have spoken to a number of prominent and influential non-Japanese over the past few days. Everyone is freaking out. Some are planning on leaving this year. Hello....is anyone listening?
(1) https://www.pwc.com/jp/en/taxnews-international-assignment/assets/gms-20161222-en.pdf
(2) http://www.japantimes.co.jp/news/2016/01/06/national/social-issues/government-weighs-immigration-maintain-population-boost-workforce/#.WGrrYxt97IU