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Statutory Interest Rates in Japan　2023

Mar 08, 2023

1. Basic Rules Regarding Statutory Interest Rates in Japan

Article 404 of the Civil Code stipulates that the interest rate based on the statutory interest rate shall apply to claims that accrue interest if no declaration of intent is made, and the statutory interest rate is 3% per year. However, Paragraph 3 of the same article stipulates that the statutory interest rate is subject to change every three years, and the Ministry of Justice ordinance defines the criteria for this change. Therefore, it is necessary to investigate the fluctuation system to see what the statutory interest rate will be in the future.

Ministry of Justice: Law Amending a Portion of the Civil Code (Amendment of the Law of Obligations)
https://www.moj.go.jp/MINJI/minji06_001070000.html
ChatGPT summary of key points

The statutory interest rate in the Civil Code is set at 3% per annum from April 1, 2021, and will be reviewed every three years.

The statutory interest rate varies according to the average interest rate calculated for each period, called the base rate.

The base rate is the average of the average interest rates on short-term loans for the five-year period from January of the year six years prior to the year in which each term begins to December of the year two years prior, and is announced in the Official Gazette by the Minister of Justice at least one year before the first day of each term.

The change in the statutory interest rate will be made when the rate changes by 1% or more from the base rate occur, corresponding to the change in the base rate (with fractions of less than 1% rounded down).

The base rate for the second period (from April 1, 2005 to March 31, 2026) is notified as 0.5% per annum. The base rate for the first period was 0.7% per year.

2. statutory interest rate for the second period
Bolded letters indicate the answer.

Statutory interest rate until March 31, 2020 = 5% per annum

Statutory interest rate from April 1, 2020 to March 31, 2023 = 3% per annum

Statutory interest rate from April 1, 2023 to March 31, 2026 = 3% per annum

Statutory interest rate on and after April 1, 2026 ⇒ Undetermined (subject to change)

（法定利率）
(Statutory Interest Rate)
第四百四条利息を生ずべき債権について別段の意思表示がないときは、その利率は、その利息が生じた最初の時点における法定利率による。
Article 404(1)Unless the parties manifest a particular intention with respect to a claim which bears interest, the rate of the interest is the statutory interest rate as of the time when the interest first accrues.
２法定利率は、年三パーセントとする。
(2)The statutory interest rate is 3% per annum.
３前項の規定にかかわらず、法定利率は、法務省令で定めるところにより、三年を一期とし、一期ごとに、次項の規定により変動するものとする。
(3)Notwithstanding the provisions of the preceding paragraph, pursuant to the provisions of Ministry of Justice Order, the statutory interest rate is to change pursuant to the provisions of the following paragraph for each term consisting of three years.
４各期における法定利率は、この項の規定により法定利率に変動があった期のうち直近のもの（以下この項において「直近変動期」という。）における基準割合と当期における基準割合との差に相当する割合（その割合に一パーセント未満の端数があるときは、これを切り捨てる。）を直近変動期における法定利率に加算し、又は減算した割合とする。
(4)The statutory interest rate for each term is the rate calculated by adding or deducting the rate equivalent to the difference between the benchmark rate for the most recent term during which there was a change in the statutory interest rate pursuant to the provisions of this paragraph (hereinafter referred to as the “most recent term of change” in this paragraph) and the benchmark rate for the current term (any part of the ratio which is less than 1% is disregarded), to or from the statutory interest rate for the most recent term of change.
５前項に規定する「基準割合」とは、法務省令で定めるところにより、各期の初日の属する年の六年前の年の一月から前々年の十二月までの各月における短期貸付けの平均利率（当該各月において銀行が新たに行った貸付け（貸付期間が一年未満のものに限る。）に係る利率の平均をいう。）の合計を六十で除して計算した割合（その割合に〇・一パーセント未満の端数があるときは、これを切り捨てる。）として法務大臣が告示するものをいう。
(5)The term “benchmark rate” prescribed in the preceding paragraph means the rate announced by the Minister of Justice as the rate calculated by dividing, by 60, the sum of the average interest rate for short-term loans for each month (meaning the average of the interest rates for loans (limited to loans for a term of less than one year) extended by banks in each month)) during the period from January of the year six years prior to the year which contains the first day of each term to December of the year two years prior to the year which contains the first date of each term (any part of the rate which is less than 0.1% is disregarded), pursuant to the provisions of Ministry of Justice Order.

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