Directors’ compensation

Committee:
Tax
status:
No progress
Published:
There has been no further movement on recent tax reforms that relaxed the rules for the deductibility of directors’ compensation. The rules governing the deductibility of director compensation do not go far enough to achieve the stated aims of the tax reform to develop Japan as a Global Financial Center.

Recommendations

  • Align the rules in line with international standards and allow deductions for directors’ compensation in principle unless there is an identifiable risk that the level of compensation is excessive or unreasonable; or is being used to manipulate the level of taxable income.