Advertisement
Japan’s bid to compete with Hong Kong as finance hub faces taxing problem
- Top bankers would have to hand over half their earnings to the taxman in Tokyo, making Japan a far less appealing destination than Hong Kong
- And while some foreigners may be willing to give Tokyo a go given Hong Kong’s issues, there may not be enough jobs for them, one observer says
Reading Time:3 minutes
Why you can trust SCMP
Japan’s push to make itself a more attractive financial hub faces a taxing problem if it is to stop the drip-drip departure of finance professionals to other cities in Asia.
Advertisement
While the pandemic has put most relocations on the back burner for now, Prime Minister Yoshihide Suga is trying to better position Tokyo as a potential base for financiers when transfers and hiring return. Efforts so far show that the government has identified taxation and the language barrier as key hurdles.
China’s intensifying crackdown on Hong Kong has raised hopes Tokyo may finally have a better chance of competing as a banking destination. But Japan still appears a long way from making the numbers work.
Finance industry stars with million-dollar salaries would have to hand over half their earnings to the government for the privilege of working in Tokyo. That unpleasant fact suggests recent efforts can only help stop the rot at best, rather than turn the tide.
It’s true that employees with more modest salaries might actually be better off in Tokyo than in Hong Kong or Singapore because Japan’s tax rates are progressive and living costs are surprisingly low.
Advertisement
Years of deflation have driven Tokyo rents way down since the go-go days when the land under the Imperial Palace was supposedly worth more than all of California.
Advertisement