Business / Economy

Japan mulls scrapping tax break for big firms that wine and dine clients

JIJI

The administration of Prime Minister Shinzo Abe is considering ending a special tax break for wining and dining expenses at large companies at the end of fiscal 2019, informed sources said.

The administration believes the measure, which allows half the expenses to be deducted from taxable income, has not been very effective in stimulating consumption, the sources said Saturday.

Its scrapping is expected to be included in a tax reform outline for fiscal 2020 that the government and ruling parties are slated to adopt next month. The special tax relief was introduced to alleviate the impact of the April 2014 consumption tax hike, which raised the levy to 8 percent from 5 percent as part of a two-stage measure to double it. Its doubling to 10 percent was completed last month.

The temporary step, which was renewed every two years, is now viewed as unnecessary as many big companies are spending less on wining and dining with business partners, according to a ruling party source.

In the meantime, the government plans to keep a similar tax break for small firms in place, seeing that many are still spending relatively large amounts on entertaining clients.

The measure for small businesses, which account for over 90 percent of all domestic companies and are capitalized at ¥100 million or less, is expected to be extended for two more years.

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