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Ruling LDP Debates Plan To Raise Effective Corporate Tax Rate

JAPAN
Political RiskPolitical Risk BulletBulletMarketsFixed IncomeForeign ExchangeBank of Japan (BOJ) Market News

The tax committee of Japan's ruling Liberal Democratic Party (LDP) discussed a plan to raise the corporate tax rate, while expanding tax relief on capital investment, Jiji Press reports without attribution.

  • LDP tax executives have devised the plan to incentivise business investment and support the structural transformation of the Japanese economy.
  • The plan will be discussed with the government ahead of the tax reform expected in 2023, but officials are unsure about the response of the business community.
  • Japan's effective corporate tax rate (national plus local) was last raised in 1984 and currently sits at 29.74%, following gradual cuts initiated in 2015.
  • However, the ruling coalition judges that these tax cuts have failed to achieve the goal of stimulating capital investmnent and encouraging wage hikes.
  • The report suggests that the increase in effective corporate tax rate could be calibrated to match the amount of expansion in tax relief measures.
  • "It is unclear whether the effective tax rate will be raised, as strong opposition is expected from profitable companies, mainly large companies."
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The tax committee of Japan's ruling Liberal Democratic Party (LDP) discussed a plan to raise the corporate tax rate, while expanding tax relief on capital investment, Jiji Press reports without attribution.

  • LDP tax executives have devised the plan to incentivise business investment and support the structural transformation of the Japanese economy.
  • The plan will be discussed with the government ahead of the tax reform expected in 2023, but officials are unsure about the response of the business community.
  • Japan's effective corporate tax rate (national plus local) was last raised in 1984 and currently sits at 29.74%, following gradual cuts initiated in 2015.
  • However, the ruling coalition judges that these tax cuts have failed to achieve the goal of stimulating capital investmnent and encouraging wage hikes.
  • The report suggests that the increase in effective corporate tax rate could be calibrated to match the amount of expansion in tax relief measures.
  • "It is unclear whether the effective tax rate will be raised, as strong opposition is expected from profitable companies, mainly large companies."