The Japanese government is considering tax incentives for gains from the sale of non-core businesses, reportedly with the aim of removing obstacles to reallocating capital to growth areas. The proposal is expected to be included in a tax reform request due to be submitted by the end of this month, with specific eligibility requirements to be worked out going forward.
Sources in Tokyo say the Japanese government is considering tax incentives for gains from the sale of non-core businesses. The measures could accelerate long-delayed corporate restructuring and encourage industry consolidation.
The plan is intended to remove a major obstacle to reallocating capital to growth areas through the sale of non-core businesses, and could become one of the key measures supporting Prime Minister Takaichi (高市)'s push for corporate governance reform.
Under the plan, companies could defer indefinitely the approximately 30% corporate tax on gains from the sale of non-core businesses if they reinvest the funds in core businesses within several years and commit to the investment.
The proposal is expected to be included in a tax reform request to be submitted at the end of this month, with details to be finalized before next fiscal year's tax reform package is approved at the end of the year, according to sources. LSEG says the value of M&A transactions by Japanese companies reached a record high last year, with divestitures by Japanese companies potentially accounting for part of the total.