Japan to Lower Corporate Taxes

December 31, 2014 Taxation in Japan

TOKYO – The government of Japan is encouraging businesses to raise employees’ salaries by reducing the taxes faced by business.

On December 30th the ruling coalition approved a cut to the rate of corporate taxes in the country, while giving indication that even further cuts may be enacted in coming years in order to boost economic activity.

Currently the top effective tax rate on corporate profits in Japan is 34.6 percent, however, under the details of the government’s proposal, the rate will fall to 32.1 percent in April, falling to a further 31.3 percent in April 2016.

The cuts are expected to result in the loss of tax revenue collections of approximately JPY 400 billion over the course of the next two fiscal years.

The reduction in the tax obligations faced by businesses is intended to encourage employers to boost salaries, a key point to the government’s current plan to bolster economic activity and recovery in the country.

Photo By: xsix