What Japan’s Cabinet Order on Pillar 2 Includes & Doesn’t Include

Japan’s Cabinet Order to Partially Amend the Enforcement Order of the Corporation Tax Law (Cabinet Order No. 208) was promulgated in the Official Gazette on June 16, 2023.

Whilst Japan had previously enacted a law to implement the Pillar Two Globe Rules, the GloBE law did not provide many of the detailed rules relating to GloBE income, adjusted covered taxes or the calculation of top-up tax. In many cases the law specifically stated that a future Cabinet Order would contain the detailed provisions.

This Cabinet Order addresses this and provides further detail on many aspects of the GloBE rules.

Most notably, it includes a new Article 155 in the Enforcement Order of the Corporation Tax Law (the ‘Enforcement Order’) which applies for GloBE purposes. Key aspects of this are:

Excluded Entities

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