Finance Minister Masajuro Shiokawa said Friday that his ministry will try to introduce a consolidated corporate tax system as early as possible in fiscal 2002 and make it retroactive to April 1.

"The bill for consolidated taxation will be enacted sometime after the beginning of next fiscal year," Shiokawa told a news conference after a Cabinet meeting. "And it will be retroactive to the beginning of the fiscal year."

Although the introduction of the consolidated tax system had originally been planned for April 1, Shiokawa said last week that it would be delayed by one year due to the amount of work needed to prepare the related legislation.

In the face of strong criticism from business circles and members of the ruling parties, however, the finance chief altered his position.

The Finance Ministry has therefore worked out a plan to submit the bill to the Diet around May for enactment by June, and the system will be applied retroactively for the full fiscal year that begins in April.

The Liberal Democratic Party's tax panel, which endorsed the plan Thursday, will now start working on tax reform proposals for the next fiscal term, including measures to compensate for a prospective revenue shortfall of 800 billion yen as a result of the introduction of consolidated taxation.

The consolidated system, one of the pillars of the taxation overhaul for fiscal 2002, is considered a vital tool to shore up the competitiveness of Japanese companies.

Under the system, a consolidated tax would be levied on a corporate group as a whole, not individual group firms. This means losses from a firm within the group would be subtracted from the profits of another group company to calculate taxable income, reducing the group's tax burden.

In addition to the group tax system, the LDP tax panel has so far agreed not to introduce a corporate pro forma tax in fiscal 2002 according to party officials.

This plan is a revised version of a scheme presented by the Public Management, Home Affairs, Posts and Telecommunications Ministry to the LDP last year.