Wednesday, January 16, 2013

Top Income to rise from 40% to 45% and Inheritance Tax up from 50% to 55%

 The Liberal Democratic Party and New Komeito are near agreement on raising the maximum income tax rate to 45 percent from 40 percent, as well as increasing the top inheritance tax rate to 55 percent from 50 percent, according to party sources.

The parties have entered the final stage of discussions on the issues.

The maximum rates for income and inheritance taxes are expected to increase as early as 2015.

Currently, the top income tax rate of 40 percent is applied to people who earn more than 18 million yen in taxable income.

The two parties have been discussing whether the envisaged 45 percent rate should be applied to earners with taxable incomes higher than 30 million yen, or higher than 50 million yen, according to the sources.

The maximum inheritance rate of 50 percent is currently applied to taxable assets worth more than 300 million yen.

The LDP and Komeito have been working out a detailed proposal by taking into account the one proposed by the DPJ-led government that would see a top inheritance tax of 55 percent for taxable assets worth more than 600 million yen, the sources said.

The two parties also have been discussing increasing the number of people subject to an inheritance tax by reducing tax deductions allowed for inherited assets, the sources added.

The envisaged lighter gift tax rates would apply to assets given by people before their death to their direct descendants.

Currently, a tax rate of 40 percent is applied to taxable gifts worth between 6 million yen and 10 million yen. A 50 percent rate applies to gifts worth more than 10 million yen, regardless of the recipient.

The tax system revisions for next fiscal year are expected to include lower gift tax rates, with 30 percent eyed for taxable assets worth between 6 million yen and 10 million yen, and 40 percent for those between 10 million yen and 15 million yen, the sources said.

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