2026 Tax Reform Series – Part 2: Corporate Tax

This week, we look at several important corporate tax proposals in Japan's 2026 Tax Reform.

Please note: Some measures are still proposals and may change before becoming law.

1. Changes to Tax Incentives for Employee Wage Increases

Japan plans to revise tax incentives that encourage companies to increase employee salaries.

If your company has employees in Japan, these changes may affect future tax planning.

2. New Tax Incentives for Business Investment

The government plans to introduce new tax incentives for certain business investments and productivity improvements.

Companies planning to purchase equipment or expand operations should watch for further details.

3. Related-Party Transactions

If your company does business with a parent company, subsidiary, or another related company, documentation remains important.

We explained this topic in our previous three-part series on Related-Party Transactions.

Key Takeaway

The 2026 Corporate Tax proposals focus on:

• encouraging wage increases,

• supporting business investment,

• and strengthening tax compliance for related-party transactions.

Foreign business owners should continue to monitor these changes as the legislation progresses.