Inheritance Tax Japan

About Inheritance Tax Japan

Japan has the highest inheritance tax rate in the world, with a top marginal rate of 55 percent on large estates. The basic exclusion is 30 million yen plus 6 million yen per statutory heir. For large estates, the effective rate can exceed 50 percent. The high inheritance tax has led to extensive tax planning, including early succession planning and use of life insurance. Japanese families often sell inherited property to pay the tax. The tax is particularly burdensome because Japanese inheritance is usually concentrated in real estate and shares of family companies. Inheritance tax disputes are common. The Japanese tax has been credited with preventing the emergence of powerful dynastic families in postwar Japan. The high rate also encourages consumption and charitable giving as alternatives to accumulation.