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JAL preferential tax treatment faces rethink

Kyodo

The Liberal Democratic Party’s tax panel chief indicated Thursday the effective tax break given to Japan Airlines Co., which received government aid to turn around, will be reconsidered.

“It is about to pay dividends after receiving public funds,” Takeshi Noda said. “There is controversy regarding whether it can be allowed to give priority to dividend payments without paying tax on profit. We will consider how to handle the situation.”

JAL has been criticized for benefiting both from bankruptcy protection under the corporate rehabilitation law and from ¥350 billion in aid from the state-backed Enterprise Turnaround Initiative Corporation of Japan.

The protection has allowed JAL to use past losses to avoid paying any taxes on profits, whereas other loss-making firms get only 80 percent protection. As a result, JAL is expected to save ¥311 billion in tax payments through March 2019.