JAPAN Law and Practice Contributed by: Taro Omoto, Yusuke Nakajima and Makoto Sakai, Mori Hamada & Matsumoto
3.4.8 Judgments in Foreign Currencies See 2.6.7 Judgments in Foreign Currencies . 3.4.9 Taxes/Fees Payable A borrower who pays interest to a foreign lender will be required to pay withholding tax under the domestic tax law of Japan. Although registration tax will apply to a registration of a security interest in an aircraft, it is usually borne by the borrower. 3.4.10 Other Relevant Issues There are no other material issues. 4. Other Issues of Note 4.1 Issues Relevant to Domestic Purchase, Sale, Lease or Debt Finance of Aircraft There are no other material issues. 4.2 Current Legislative Proposals In May 2025, the Diet passed a bill titled the “Act on Security Assignment Agreement and Title Retention Agreement” (provisional translation), which sets out rules regarding security assignments over movables and receivables. This law is expected to come into effect within two years and six months from the date of promulgation.
Until now, there have been no explicit statutory pro - visions governing security assignments of movables and receivables or title retention, and the practical operation and legal relationships arising from such security interests have been left to interpretation. The purpose of this law is to enhance legal certainty and predictability in commercial transactions by clearly defining, at the statutory level, the nature of the secu - rity interests created by these agreements, as well as the scope of secured obligations, the order of priority and the methods for enforcement. In addition to the methods for enforcement described in 3.4 Enforcement , the law clarifies that direct col - lection is permitted for security assignments over receivables, and that enforcement by judicial auction through the court is available for security assignments over movables (including engines).
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