The state will approve a new taxation system by the Kanagawa Prefectural Government that targets companies enjoying tax exemptions due to cumulative deficits despite being profitable on a yearly basis, the home affairs ministry said Friday.

It is the first time that the national government has accepted an independent taxation system drawn up by a prefectural government since April 2000, when a law was implemented to increase the autonomy of local governments.

In March, however, a sport fishing tax imposed by the governments of a town and two villages in Yamanashi Prefecture was given approval by the national government.