The focus of next year’s tax reform will be to make the tax-exempt investment system on small investments (NISA) permanent and the extent to which the annual tax-exempt investment quota can be expanded. The securities industry is calling for a major expansion, but there are various points of contention, and senior officials of the ruling party’s Tax Commission, which has significant authority over tax reform, have yet to present a concrete plan.
Kenji Nakanishi, chairman of the Finance and Banking Division of the Liberal Democratic Party, said, “Since we are talking about a plan to double our income from assets, we want it to go along with that plan.” However, Yoichi Miyazawa, chairman of the LDP Tax Research Institute, cautiously said, “We will discuss it in the future,” and Finance Minister Shunichi Suzuki said, “Right now we are making final adjustments.”
The expansion of the NISA, which promotes the shift from savings to investment, will be a pillar of the government’s “asset income doubling plan” which is to be completed by the end of the year. The Financial Services Agency has practically merged the NISA system, which has three types depending on the target age and investment method, into the “Tsumitate NISA” which is suitable for long-term diversified investment, making the system in perpetuity, annual investment limits, and cumulative tax. trying to expand
| existing system | Tsumitate NISA | NISA General | NISA Thursday |
|---|---|---|---|
| investment period | until 2042 | Until 2028 | Until 2023 |
| Tax-free holding period | 20 years | 5 years | 5 years |
| Annual investment quota | 400,000 yen | 1.2 million yen | 800,000 yen |
| Tax-exempt limit | 8 million yen | 6 million yen | 4 million yen |
| Ships | investment trust | Stocks, investment trusts, etc. | Stocks, investment trusts, etc. |
| subject | 20 years or older | 20 years or older | Under 20 |
The Japan Securities Dealers Association announced in JulyIn the proposal, he is asked to do the same as in the UK. The purpose of expanding the NISA is to expand the asset income of the middle class, and the annual investment limit will be expanded to 600,000 yen, which is 1.5 times the current amount, and 2,400,000 yen, for a total of 3 million yen for the general NISA.
On the other hand, Shungo Kore-eda, a senior researcher at the Daiwa Research Institute, estimates that in order to double the income of the middle class wealth, it is necessary to increase the annual tax exemption limit to 1.2 million yen, which is three times more than r Current NISA Tsumitate.
Prime Minister Fumio Kishida (November 18, Bangkok)
Photographer: Andre Malerba/Bloomberg
The Liberal Democratic Party and New Komeito plan to hold a full debate on tax reform in mid-December for next year’s tax reform. Issues related to the expansion of NISA are as follows.
1. Continuity and limits of tax exemption
NISA exempts tax on profits and dividends from investments in stocks and investment trusts, but is currently a time-limited system. Prime Minister Fumio Kishida announced in a speech in September that he would make it permanent.
In response, Liberal Democratic Party (LDP) tax commission chairman Miyazawa stressed that although he would take the prime minister’s opinion as a “reference,” the tax system would ultimately be decided by the party that control.Komeito isMinohito Nishida, chairman of the Tax Research Institute, said the deadline for middle class asset building needed to be lifted, and he agreed with making it permanent.
However, Mr. Nishida is cautious about significantly expanding the cumulative tax exemption limit of 8 million yen under Tsumitate NISA.” he noted.
According to Daiwa Research Institute’s Kore-eda, the cumulative investment amount will be 8 million yen for the next five years, but considering the goal of building assets, he said, “Referring to similar systems in other countries, it will be expanded from 16 million yen to about 34 million yen. Maybe it’s right to do that,” he said.
2. General NISA and growth investment quota
Based on the merger of the “Tsumitate NISA”, the FSA will also introduce a “growth investment quota” which will succeed the “general NISA,” which allows a wide range of investments in individual stocks, exchange traded funds (ETFs ), and real estate investment trusts (REITs).
Miyazawa of the Liberal Democratic Party said, “There are people who buy stocks of companies whose share prices have temporarily plunged due to scandals and problems in the general NISA, which allows you to invest in individual stocks, as if is a betting ticket. ” When the stock price returns to 5-10 times, he said, “I have a problem that I can make a lot of money and they don’t pay taxes,” and expresses concern that it is also used for speculative transactions .
3. “100 Million Yen Wall” and Financial Income Tax
Employment income is taxed at a maximum of 55%, but financial income is taxed uniformly at 20%. Prime Minister Kishida promised to review financial income tax in his campaign pledge last year, but it has not materialized due to falling stock prices and criticism from the market.
The tax affairs executives of the Liberal Democratic Party (LDP) and New Komeito Party are positive about revising the taxation of financial income in order to correct the difference. Miyazawa of the Liberal Democratic Party said, “I want to have a proper discussion about the 100 million yen wall.”
Nishida Komeito has suggested that taxation should be strengthened with the very rich earning more than ¥1 billion a year in total income, including salary income and gains from selling stocks. The specific tax items to be strengthened will be discussed in the future.
