Heretofore, a foreign investment fund concluding a discretionary contract with an asset management company in Japan ran the risk of its investment returns being subjected to both taxation in Japan in the country where it resides because of so-called "permanent establishment". The Financial Services Authority now hopes to lure back fund companies that have been leaving Japan back by drawing a clearer line between what is taxable and non-taxable returns.

Since these funds have already moved on to greener pastures in Singapore or Hong Kong, the new-found FSA flexibility is not enough reason in and of itself for them to return, as corporate taxes themselves are far lower in such jurisdictions, at less than 10% versus an effective corporate tax of 40% for Japan.

So far, there is little evidence that the FSA actually "gets it", and is actually making promises it cannot keep, such as promising simplified entry procedures (which is immigration's job) or clarifying taxable versus non-taxable returns (which is the Tax Agency's job).