The government introduced a consolidated tax system Monday to help promote corporate restructuring, especially by making it easier to establish holding companies and spin off loss-making divisions.

Under the consolidated system, taxes are calculated based on the combined profits or losses made by a group. Hence, losses from one company can be set against the profits of another group company for tax purposes, reducing the burden on the group as a whole.

Consolidated taxation is already in place in many countries where business circles insist it is vital for restructuring, especially when establishing holding companies and spinning off unprofitable divisions.