Japan’s Global Minimum Tax Law Is Enacted

On March 28, 2023, Japan enacted a Pillar Two Income Inclusion Rule from April 1, 2024. 

South Korea, was the first country to enact a global minimum tax law (on December 31, 2022), and a number of other jurisdictions have draft laws in place or have partially enacted legislation. See: Current GloBE Legislation.

The House of Councillors of the Japanese Parliament enacted the Bill for the Partial Revision of the Income Tax Act on March 28, 2023 with no amendments to the GloBE rules. 

Whilst it is yet to be published in the Official Gazette, [UPDATE: See: Japan’s Global Minimum Tax Law is Gazetted Today] once a bill has been approved by both houses of Parliament, it becomes law under Article 59 of the Japanese Constitution. Therefore, Japan’s Income Inclusion Rule applies for Accounting Periods beginning on or after April 1, 2024.

Given that the law is now enacted, it is likely that the Accounting Standards Board of Japan (ASBJ) will issue the final Practical Response Report for the short-term special tax treatment of deferred tax arising from the Global Minimum Tax. [UPDATE: See Japan’s Accounting Standards Board Publishes Deferred Tax Guidance For Global Minimum Tax.]

The Proceedings Report and the Approval Resolution of the House of Councillors approving the Bill can be viewed at: