TOKYO, June 27 (Reuters) – Japan has relaxed its tax code so foreign asset managers and hedge funds can avoid dual taxation, as part of Tokyo’s push to revive itself as a global finance centre.
In a two-step process that began in April with the revision of a cabinet order and finished on Friday, the government has retooled tax rules so offshore funds can avoid being classified as having a "permanent establishment" in Japan.
Commonly referred to as a "PE" in tax law, the classification would force offshore funds — which already pay taxes in their home countries — to pay domestic taxes on any returns made in Japan.
Faced with sluggish growth and a rapidly shrinking population, the world’s second-largest economy is desperate for foreign investment and is especially keen to woo hedge funds, which have an estimated worth of $2 trillion globally.
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