Corporate Tax Cuts Off the Table in Japan

August 16, 2013 Taxation in Japan

Taro AsoTOKYO – Cutting corporate tax rates may be a long-term goal for Japan, but the government is not in a position to slash the tax in the near future.

Despite the recent media speculation that the government of Japan is looking to cut the rate corporate income tax next year, the national Finance Minister Taro Aso and Economic Minister Akira Amari came forward in a news conference held on August 15th to deny the rumors, revealing that the government may instead be looking at other tax cuts.

The cut to corporate tax rates was thought to be a trade-off offered by the Prime Minister Shinzo Abe as a means of garnering more support from the public for the proposed hike to sales taxes, which is scheduled to take effect next year.

The Finance Minister explained that the government is not looking at reducing the tax, as since only 30 percent of business in the country are liable to pay the tax, lowering the rate would not provide immediate benefits to Japan, because .

Taro Aso said that instead the government would look closer at tax measures which would encourage businesses to increase capital expenditure.

At the same news conference the Akira Amari suggested that corporate taxes could be cut in the future when the government has the necessary financial resources, but in the current situation the government would instead concentrate on tax measures which would boost business competitiveness.

Photo by CSIS: Center for Strategic & International Studies