• Kyodo


The government is considering ending tax cuts to reduce burdens for corporate investment in order to enhance productivity at the end of March 2017, sources close to the matter said.

With the change, the government expects an increase of around ¥300 billion to ¥500 billion in its tax revenue and plans to use the sum to make up for lower tax revenue so it can accelerate moves to cut the corporate tax rate.

The ¥500 billion accounts for slightly more than 1 percent of the corporate tax income take. The government plans to make arrangements with ruling parties to have the plan compiled in tax reform proposals at the end of this year.

The government expects speeding up a corporate tax cut will widely benefit profit-making enterprises, as the tax breaks for business investment are more likely to benefit selected industry sectors, the sources said Thursday.

Under a plan decided by the government and the ruling coalition, Japan’s effective corporate income tax rate will be slashed by at least 3.29 percentage points in two stages to bring down the rate to 31.33 percent in fiscal year 2016.

Meanwhile, the Ministry of Economy, Trade and Industry is aiming to employ additional measures to reduce the nation’s effective corporate tax rate to below 30 percent in fiscal 2016.

Japan’s corporate tax rate is relatively high by international standards.

The existing tax breaks, introduced in 2013, are provided to companies which purchase and introduce state-of-the-art and more productive equipment in a bid to invigorate business investment.

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