Does a permanent reduction in repatriation tax encourage firms to increase domestic investment? Using Japanese firm level at both parent and affiliate level from 2007-2013, we aim to answer this question by studying the permanent repatriation tax cut in Japan during 2009 and show that similarly to the insight from the U.S. temporary reduction, the permanent reduction does not increase firms' domestic investment or employment, but rather, tends to increase shareholder payouts. We even find a negative impact on investment and employment in foreign subsidiaries and a negative impact on domestic R&D research, which indicates the complementary between foreign activities and domestic R&D. The evidence is apparently against the initial policy intent to boost domestic investment and employment, but it doesn’t necessarily mean that the economy-wide resource allocation becomes worse.