According to reports last week, the Japanese Finance Ministry is planning to phase out and eventually abolish a system of tax breaks for Japanese firms with operations in developing countries.
Under the scheme in question, Japanese firms are allowed to deduct from their corporate tax the breaks given to their branch offices in certain countries. The measure was put in place to help stimulate growth in developing countries, but the government now reasons that since these countries are now significantly more developed than when the scheme began operating, the system is now effectively moribund.
The cutting back and eventual elimination of this measure will increase the tax burden on many Japanese firms, who currently benefit to the tune of many billions of yen every year.
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