Ruling LDP Debates Plan To Raise Effective Corporate Tax Rate

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."