Japan’s government is evaluating tax exemptions on gains from the sale of non-core businesses as part of efforts to accelerate corporate restructuring and consolidate sectors. Under the plan, companies would receive an indefinite deferral of approximately 30% of corporate tax on such gains, provided proceeds are reinvested into acquisitions aligned with their core operations within a few years.
The proposal is slated for inclusion in tax reform requests to be submitted by the end of this month, with final details to be finalized before the approval of the next fiscal year’s tax reform package at year-end. The initiative is positioned as a key component of Prime Minister Sanae Takaichi’s corporate governance agenda, aiming to dismantle dense cross-shareholding networks that have historically trapped non-core assets within conglomerates.
The framework draws on Germany’s early-2000s tax reforms, which broadly exempted companies from taxes on gains from the disposal of equity stakes. That policy helped reduce cross-shareholdings and improve capital allocation efficiency. Analysts note that Japan’s current tax treatment discourages divestitures, as gains from sales are fully taxed, reducing incentives to transfer assets to owners better positioned to extract value.
The government has not specified which sectors would benefit most, but the measure is expected to target industries with fragmented ownership structures and underutilized assets, including manufacturing and technology. The proposal follows broader efforts to enhance corporate governance and productivity amid Japan’s prolonged low-growth environment.
