Until now Japan’s government debt has largely been owned by its own citizens and corporations, just as the U.S. once was.Thus it’s peculiar how Japan is now cutting taxes for foreign bonds investors. Perhaps the ability of the Japanese to buy their government’s ever increasing debt has become stretched. Thus the new the foreign bond-buyer welcome mat:
FT: The Japanese government is easing the tax burden on non-resident investors in Japanese bonds in an effort to boost foreign participation in Japan’s Y933,000bn ($10,300bn) government and corporate bond market.
After June 1 next year, non-resident investors will be exempt from the 15 per cent tax currently applied to interest and the 30 per cent tax on any profits made when redeeming corporate bonds.
The government will also simplify procedures for obtaining tax exemptions on interest on government bonds and widen the scope of investors qualified to receive the tax exemptions.