Japan set to scrap taxes for foreign investors-paper

TOKYO, Jan 7 (Reuters) - Japan's government will seek to scrap capital gains taxes for foreigners investing in Japanese companies through funds, in a bid to kick-start investment which has slowed amid the global economic downturn, the Nikkei business daily reported on Wednesday.

Japan currently levies a corporate tax of about 40 percent on capital gains when foreign firms sell shares through funds, one of the highest rates in the world, depressing the flow of global capital into Japan, the paper said.

Foreign investors account for only 4 percent of fund investment in Japan, far below the 75 percent rate in the U.K., the 60 percent in the European Union and about 20 percent in the United States, the Nikkei said.

The government plans to submit a bill to the current session of parliament, seeking to end corporate and income taxes on foreign investors who invest via funds, from April, it said.

Eligible funds will need to have held stakes in Japanese firms for at least a year, while any foreign investor with a stake of 25 percent or more in these funds will not be eligible, it said. (Reporting by Yumiko Nishitani; Editing by Edwina Gibbs)