Cutting the corporate tax rate would help double foreign direct investment by 2020, a government panel said Monday.
Prime Minister Shinzo Abe's government must also promote deregulation in the labor market to encourage more overseas companies to operate in Japan, the panel said in a report compiled after several meetings between Japanese experts and foreign business leaders.
The panel is scheduled to submit the report to the Council on Economic and Fiscal Policy soon. The proposals are expected to be incorporated in the government's medium- to long-term economic and fiscal policy blueprint to be released in June.
Japan's effective corporate tax rate — consisting of national and local taxes — stands at about 35 percent, compared with 25 percent in China, around 24 percent in South Korea and 17 percent in Singapore, according to data from the Finance Ministry.
"It is important to reduce (the corporate tax rate) to a level equivalent" to that in other countries, the report quoted one of the panelist as saying.
Business leaders and some experts have argued that foreign firms have been reluctant to tap the Japanese market, choking off domestic demand and hampering economic growth.