That’s because the government subjects long-term foreign residents to inheritance tax of up to 55 percent on their worldwide assets — meaning heirs could be forced to give up their family homes or businesses even if they’ve never set foot in Japan.
Now, Tokyo Gov. Yuriko Koike is trying to ease the impact of the rule as part of her bid to make the city a global financial hub. Her government released a report last Friday urging for the rule to be reviewed, together with other measures aimed at attracting asset managers to the Japanese capital instead of rival centers such as Hong Kong and Singapore.
Yet there’s no guarantee that Prime Minister Shinzo Abe’s government will heed Koike’s call on the tax, especially since the law was only just amended in April.
“Japan doesn’t seem to want long-term residents anymore,” said Paul Hunter, secretary general of the Tokyo-based International Bankers Association which represents about 50 overseas financial institutions and has been lobbying against the rule. “Why would you do that at a time when you’re doing Tokyo as an international financial center?”
When the inheritance tax was introduced in 2013 — mainly to target Japanese nationals who give up their citizenship to avoid paying taxes on their overseas assets — it potentially applied even to short-term foreign residents. In April, the rule was tweaked to restrict it to people who have lived in Japan for more than 10 years. But at the same time, the government added a “tail” clause that allows tax authorities to claim a former resident’s global assets even if he or she dies within five years of leaving Japan.
Expatriates “can’t die in this country,” Shigesuke Kashiwagi, Japan head of U.K. investment company Schroders PLC, told Koike in June at a meeting of a panel formed last year to advise the local government on luring financial firms to Tokyo … (read more)
via The Japan Times