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Proposals on Tax Reform for FY2018
21 July, 2017
The Life Insurance Association of Japan, LIAJ (Chairman: Masahiro Hashimoto, President of Sumitomo Life Insurance Co.) released the proposals on tax reform for fiscal year 2018.
The summary of our proposals is as follows.
➢ In order to facilitate self-reliance of people and thereby contribute to establishing a sustainable social security system and ensuring stability to people’s lives in the changing social environment such as declining birth rate and rapid population aging and diversified lifestyle, the tax deduction for life insurance premiums should be expanded, following the on-going review of the social security system.
I. Corporate Pension Insurance
➢ The special corporate tax for reserve funds of both corporate pension plans (i.e. defined benefit corporate pension plans and employees' pension fund plans) and defined contribution pension plans which complement the public pension system should be abolished.
➢ The contributions of employers to past service liabilities under defined benefit corporate pension plans and employees' pension funds should be treated flexibly to promote the rapid building of sound pension finance.
➢ The condition for lump-sum withdrawal payment at the time of retirement on defined contribution pension plans (corporate-type) should be relaxed.
II. Life Insurance Contracts
➢ In order to secure living funds for survivors, the exemption limit for inheritance tax on death benefits which are paid based on the principle of mutual assistance, should be as follows: the sum of [¥5 million in death benefits received by the spouse] plus [(¥5 million in death benefits received by an underage dependent legal heir) multiplied by (the number of such dependent heirs)], together with the current limit (¥5 million multiplied by the number of legal heirs).
III. Asset Management
➢ Taxation related to real estate should be comprehensively re-examined.
➢ The current formula for calculating the local corporate tax of a life insurance business should be maintained.
➢ The year-end tax adjustment processes regarding tax deduction for life insurance premiums should be simplified and streamlined through, for example, promotion of digitalization.
➢ Criteria for application of domestic consumption tax with regard to securities trading such as transferred foreign securities should be clarified.