Japan considers increase in NISA tax exemption

11 June 2014   Category: News, Asia, Global, Japan   By Maya Ando

Japan’s government is considering increasing the tax exemption period for Nippon Individual Savings Accounts (NISAs) by as much as three times per person from 2016, according to an Asia Asset Management source.

The current tax-free term for NISAs is five years, but this will likely be extended by an additional five-to-ten years. If the volume of retail investors grows sufficiently, Japanese authorities may eventually sweep away the tax exemption limit altogether, AAM’s contact ventures.

Introduced from January 1 this year, the NISA is Japan's interpretation of a British Individual Savings Account (ISA), and is designed to lure individual investors. Up to the end of March, 4.21 million accounts had been opened across 129 security houses, pooling 608 billion Japanese yen (US$5.9 billion) worth of assets in total.

Around 60% of NISA holders were found to be over 60 years old, while 11% were between 20 to 30 years old and first-time investors.

In terms of asset allocation, 60%, or 364.5 billion yen, of the total amount was invested in equities, while mutual funds accounted for 225.7 billion yen, or 37%.

According to data from the Bank of Japan, households in the country were sitting on 1,645 trillion yen in financial assets as of the end of last year. Of this sum, 53% was held in cash and bank deposits, with 9.4% in stocks and 4.8% in investments trusts.