Japan is planning to increase the tax burden on corporate and individual income shifted overseas as the government tries to curb tax avoidance.

Under current law, income declared at an offshore shell company is generally taxed at Japanese rates along with domestic earnings if the firm is located in a jurisdiction where the corporate tax rate is less than 20%.

The Finance Ministry is considering scrapping the 20% limit and switching to a system that imposes taxes based on income categories. Dividends, intellectual property and royalties are among the earnings and assets that would be subject to taxation.

The proposed regulations likely would apply to about 40 additional nations, including Denmark and Malaysia, where corporate taxes are lower than in Japan. For offshore companies with real operations, certain income will be exempt from taxation depending on the type of business activity. More news here