Business / Economy

LDP tax chief Amari to pursue tax system better suited to Japan's increasingly digital economy

Kyodo

The chief of a Liberal Democratic Party tax panel said Monday the group will explore changes that will lead to a tax system more in tune with the country’s increasingly digitized economy.

Akira Amari, head of the LDP Research Commission on the Tax System, said the panel will not only examine requests filed by government bodies, but also lead discussions to modify the tax system ahead of the launch later this month of a full-fledged tax policy review.

“(The party’s tax panel) can play a role in leading the taxation system in a desirable direction,” Amari said in a speech at a meeting hosted by Kyodo News in Tokyo.

The issue of digital tax has proven to be a concern across the globe amid accusations that multinational firms — in particular U.S. tech giants Google LLC, Apple Inc., Facebook and Amazon.com Inc. — are avoiding or minimizing their tax contributions.

Existing tax rules are based on where a company’s permanent office is located rather than where it makes its profits, motivating companies to position offices in favorable tax jurisdictions.

Amari, a former economy minister, is a close aide to Prime Minister Shinzo Abe. He said the prime minister has told him to give close consideration to factors related to the digitization of the economy and the condition of the economy after the Oct. 1 consumption tax hike to 10 percent from 8 percent.

Amari, who became chief of the tax panel in the ruling LDP’s leadership reshuffle in September, said a set of economic steps designed to limit the impact of the sales tax hike “have worked very well.”

In an attempt to prevent a sharp fall in consumer spending after the tax was hiked, the government introduced measures ranging from a reduced tax rate for food and other daily items to a reward-point program for using cashless payments.

Noting that personal consumption is weak, Amari also called for the economy to be supported after the Olympics next year, saying, “We should avoid a bleak economic situation after hosting such a festival.”