Japan mulls implementing tax incentives to support Yen

Japan tax incentives: Japan is considering implementing tax incentives to encourage companies to repatriate foreign profits into yen, according to the Sankei newspaper. These measures may be included in the government's mid-year policy blueprint, expected to be compiled in the summer.

The proposed tax breaks aim to address the yen's recent sharp decline by providing an incentive for firms to bring back overseas assets to Japan. However, a finance ministry official was not available for immediate comment on the matter.

The yen has depreciated approximately 11 per cent against the dollar this year, largely due to expectations of prolonged low-interest rates in Japan compared to relatively higher rates in the United States.

Under the reported plan, companies could receive tax benefits for converting around 20 trillion yen ($126.74 billion) of "foreign direct investment earnings" from their overseas subsidiaries.

While some government officials are cautious about the effectiveness of such measures, noting existing favourable tax treatments, additional steps may be necessary to achieve the desired impact.

(With Reuters inputs)