1. Introduction
On December 20, 2024, the government and ruling parties announced the 2025 Tax Reform Outline. The primary philosophy of this reform is to create a "fair and vibrant society where people can dream of a hopeful and secure future." The main themes include addressing rising prices, supporting child-rearing, aiding small and medium-sized enterprises (SMEs), and securing funding for strengthening defense capabilities. Please note that the contents may be subject to changes or revisions during the legislative process in the upcoming sessions of the Diet.
2. Main Revisions
[Income Tax]
- Increase in Basic Deduction: The basic deduction will be raised by ¥100,000, from ¥480,000 to ¥580,000.
- Increase in Minimum Guaranteed Amount for Salary Income Deduction: The minimum guaranteed amount for salary income deduction will also increase by ¥100,000, from ¥550,000 to ¥650,000.
- Establishment of a Special Deduction for Specific Relatives (Tentative Name): A new deduction system will be introduced for dependent relatives aged 19–22, aiming to support families with children.
[Corporate Tax]
- Introduction of a Special Defense Corporate Tax: A 4% surtax will be applied to the portion of corporate tax exceeding ¥5 million to secure funding for strengthening defense capabilities.
- Preferential Measures for SMEs: Tax incentives for promoting capital investment will be enhanced.
- Revisions for Large Corporations: Tax reforms will be implemented to encourage investment in capital and wage increases.
[Consumption Tax]
- Revision of the Tax Exemption System: The duty-free system for foreign visitors will shift to a "refund system," aiming to prevent fraud while maintaining convenience.
[International Taxation]
- Introduction of Global Minimum Taxation: A taxation system will be introduced to ensure a minimum tax rate in line with international tax rules.
3. Conclusion
The 2025 Tax Reform Outline incorporates various revisions reflecting current socioeconomic conditions, such as addressing rising prices, supporting child-rearing, aiding SMEs, and securing funding for defense. Notable reforms include the revision of basic deductions and salary income deductions, which will significantly impact many taxpayers. In the area of corporate taxation, the creation of a new tax for strengthening defense capabilities is a significant development.
Please note that this explanation provides a general overview and does not constitute professional advice. Avoid making decisions or taking actions based solely on this information without consulting a specialist. For any questions, feel free to contact us via the URL below.
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(References)
2025 Tax Reform Outline
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