The Japanese government considering tightening of tax breaks for interest payments by companies to prevent tax evasion by multinational companies making use of differences in taxation systems in countries.

Under the present law, up to 50% of the costs for interest payments can be deducted as costs, but in link with an OECD recommendation this will decrease to 30%. The Cabinet will submit a proposal to the regular session of parliament in 2017 at the earliest.  Transfer of interest by multinational companies to group companies located in countries with low corporate taxation level often used by European and US companies, reports Nikkei Online.  There are currently no internationally established rules on this and the OECD is working on setting a framework. The decrease will put Japan in line with European countries such as Germany and Italy, where 30% deduction is common.

Source: Nikkei Online, 政府、利払いの税優遇縮小へ　多国籍企業の税逃れ防ぐ