Japan to Tighten "Furusato Nozei" Gift Rules in Oct.

Tokyo, Sept. 24 (Jiji Press)--Lineups of return gifts offered for donations made under Japan's "furusato nozei" hometown tax donation program may noticeably change as the internal affairs ministry is set to tighten rules for some items in October.

The ministry will introduce a stricter standard for the value locally added by manufacturing and processing goods, such as electrical appliances and processed foods, that use materials procured elsewhere.

Local governments offering many manufactured or processed items as return gifts are busy coping with the rule change. Amid rising raw materials prices, many gifts may fail to meet the new standard and disappear from the lineups.

Under the furusato nozei program launched in 2008, local governments are required to limit the procurement costs of their return gifts to up to 30 pct of the donation amounts. The portion of each donation exceeding 2,000 yen is deducted from the donor's resident and income taxes in the following fiscal year, subject to income-based limits.

As the purpose of the program is to encourage taxpayers to donate to their hometowns or local governments they wish to support, the value locally added through manufacturing and processing is required to exceed 50 pct of the procurement costs for return gifts if their materials are sourced from other regions.

[Copyright The Jiji Press, Ltd.]