New levy eyed to offset proposed corporate tax cut

JIJI

The Tax Commission is set to propose introducing a new tax to help cover revenue shortfalls from planned cuts in the corporate tax rate.

The idea will be included in a final draft of the commission’s upcoming report on measures to overhaul the corporate tax system.

The draft is not expected to specify the type of new tax that should be imposed. But it cites bank taxes adopted in European countries as examples.

The commission, the government’s top body on tax issues, was slated to hold detailed discussions Wednesday before finalizing the report at a general meeting on Friday.

The draft also calls for expanding the existing size-based business tax to include firms with capital of ¥100 million or less. The tax, which is applied to money-losing companies alongside profitable ones, currently covers firms capitalized at more than ¥100 million.

The Cabinet on Tuesday approved a plan to lower the effective corporate tax rate to below 30 percent, from the current level of about 35 percent, in stages starting in fiscal 2015.

The government plans to draw up details on how to make up for the revenue loss from the corporate tax cut during full-fledged reform talks later this year.