Japan considers offering tax breaks to boost the yen

Tax incentives in Japan: The Sankei newspaper reports that Japan is thinking of introducing tax incentives to entice businesses to repatriate overseas earnings into yen. These actions could be part of the government’s mid-year policy plan, which is anticipated to be created in the summer.

The purpose of the proposed tax cuts is to encourage businesses to repatriate assets abroad to Japan in an effort to counteract the severe drop in the yen. A representative of the finance ministry was unable to comment at this time.

Because of predictions of sustained low interest rates in Japan as opposed to substantially higher rates in the US, the yen has lost almost 11% of its value versus the dollar this year.

Companies that transfer around 20 trillion yen ($126.74 billion) in “foreign direct investment earnings” from their overseas operations may be eligible for tax savings under the proposed proposal.

Although some government representatives express skepticism over the efficacy of these initiatives, pointing out already advantageous tax laws, other actions could be required to get the intended results.