- POLITICS & GOVERNMENT
Govt to expand NISA scheme in shift from savings to investments
11:00 JST, December 18, 2022
TOKYO (Jiji Press) — The fiscal 2023 tax reform package adopted by the ruling coalition Friday includes a plan to expand the NISA small-lot investment promotion scheme for a shift from savings to investments.
The ruling Liberal Democratic Party and its coalition partner Komeito also decided to keep the current tax break criteria for fuel-efficient vehicles intact until the end of next year as vehicle deliveries are being delayed amid semiconductor shortages.
They also plan to strengthen taxation of the superwealthy to correct the situation called the ¥100 million wall, in which the income tax burden starts to decrease when annual income tops ¥100 million.
The expansion of NISA, or the Nippon Individual Savings Account, is a pillar of Prime Minister Fumio Kishida’s plan to double household income from asset investments.
Under the package, Japan will unify the regular and accumulation types of NISA in 2024 to create a permanent scheme without any limit on the tax-free period.
The current accumulation type covers only investment trusts, with the annual investment limit set at ¥400,000. The figure stands at ¥1.2 million for the regular type, which allows investments in shares in listed companies.
For the unified scheme, the annual investment limit will total ¥3.6 million for a lifetime limit of ¥18 million.
According to the package, Japan will extend for three years tax breaks for the automobile weight tax based on vehicles’ fuel efficiency and the automobile tax applied when consumers buy environmentally friendly vehicles.
The criteria for the preferential treatments will be maintained until the end of next year before becoming stricter in stages from 2024.
Wealthy people with an annual income of over ¥3 billion will see a tax increase. Japan is believed to have 200-300 such people.
Those earning about ¥5 billion annually will see their effective income tax rate rise by 2-3 percentage points. The tax increase will apply to income recorded in 2025 or later.
The inheritance and gift taxes will be reviewed in an integrated manner.
The period during which assets donated during life and inherited after death must be aggregated for tax purposes will be extended from the current three years before death to seven years. This is aimed at promoting lifetime gifting and transfers of assets from older to younger generations.
The special measure exempting the gift tax for lump-sum donations of funds for education, marriage and child-rearing to children or grandchildren will also be extended.
As part of the Kishida administration’s signature policy of nurturing startups, a new scheme will be created to exempt up to ¥2 billion of capital gains from taxation if entrepreneurs reinvest the money in startups.
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