News Archive : Japan Real Estate

Thursday, November 24, 2005

Govt To Ease Rules On Noncash Inheritance Tax Payments

November 22, 2005
Govt To Ease Rules On Noncash Inheritance Tax Payments

TOKYO (Nikkei)--The government has decided to relax regulations on inheritance tax payments made using real estate or securities to make it easier to keep small and midsize businesses within a family, government sources said.

The government hopes to enforce the new rules on such noncash tax payments from fiscal 2006.

Under the new regulations, in-kind payments using unlisted stocks would be permitted. Currently, only listed stocks, as well as other securities and properties that can easily be sold, such as residential land, are accepted.

The change is also expected to allow farmland, mountainous property and forests to be used as in-kind payments as long as they are mortgage-free.

Because the current economic recovery is being fueled primarily by large companies, the government feels it is essential to nurture smaller businesses to attain further growth. The change in the inheritance tax rules is seen as a way to address this issue.

The Japan Chamber of Commerce and Industry and some other quarters have expressed concern that if the current regulations are left intact, fewer people will be able to pay the inheritance tax needed to take over a business from an older relative.

Inheritance tax payments totaled about 1.1 trillion yen in fiscal 2003, of which 230 billion yen, or roughly 20%, was made through in-kind payments. Of the 115,000 people who paid inheritance taxes that year, about 4,800, or 4%, made in-kind payments.

(The Nihon Keizai Shimbun Tuesday evening edition)