Japan may scrap a 40 percent capital gains tax for most foreign investors, a move the government expects could spur Middle Eastern sovereign wealth funds and private equity firms such as Carlyle Group to pump ¥10 trillion into its sagging markets.
The Ministry of Economy, Trade and Industry plans talks over the coming months with buyout firms and state funds from Saudi Arabia, the United Arab Emirates, Qatar and Kuwait to outline proposed changes to its tax regime, said a senior ministry official working on the matter, who declined to be named because details haven't been finalized.
Japan taxes foreign funds more than any other nation in the Organization for Economic Cooperation and Development and has ranked last among member countries as a destination for foreign direct investment for more than a decade. The proposed changes could come as early as April 1 — subject to Diet approval — and boost investment from foreign funds fivefold over the next few years from ¥2 trillion, the official said.