Dividends received deduction in Japan

The dividends-received deduction is a tax deduction system applied to a corporation which receive the dividends by other corporations in which it has an ownership stake.

A ratio of dividends received deduction applied varies depending on how much of percentages in shares a corporation owns.

 Before 2015 Tax reform   
 Ownership ratio   Amount of dividends received deduction 
100%  Total amount of dividend 
 25% or more ~
under 100% 
 Total amount of dividend less
amount of interest expense calculated by the percentage of the investment funded by debt 
 under 25%   ( Total amount of dividend less
amount of interest expense calculated by the percentage of the investment funded by debt ) × 50% 


 After 2015 Tax reform   
 Ownership ratio   Amount of dividends received deduction 
100%  Total amount of dividend 
 more than 1/3 ~
under 100% 
 Total amount of dividend less
amount of interest expense calculated by the percentage of the investment funded by debt 
 more than 5% ~
 less than or equal to 1/3
 Total amount of dividend ×50% 
less than or equal to 5%  Total amount of dividend ×20%