Japan: Foreign Asset Reporting
In January 2013, Japan introduced an additional foreign asset reporting requirement for tax residents in Japan with overseas assets of more than JPY 50 million in aggregate value. Part of Japan’s 2012 tax reform agenda, the new reporting requirement applies to permanent residents in Japan (Japanese nationals or foreign individuals who have been in Japan for more than 5 years out of the preceding 10 years), so HSP customers with employees on long-term assignments in Japan may well be impacted.
For assets held at December 31, 2013, the first such Foreign Asset Report will need to be filed by March 17, 2014. As the assets in question include vested equity awards (such as stock options) that are not yet paid/exercised, customers should be aware of this new requirements. The Japanese tax authorities have been investigating equity plans much more assiduously than in the past, so it's important to determine if this reporting requirement applies in your circumstances.
Note that the new foreign asset reporting requirement is in addition to, and not a replacement for the annually required Statement of Assets and Liabilities; however, if the asset has been reported on the Foreign Asset Report, it is not necessary to duplicate the reporting on the Statement of Assets and Liabilities. In anticipation of the inaugural reporting year, the Japanese tax authorities have announced specific instructions, including a Circular issued in March 2013 to provide more clarity on the reporting of overseas assets.