Japanese Finance Minister Forced Into Climbdown Over Consolidated Tax

by Mary Swire, Tax-News.com, Hong Kong

04 December 2001

The Japanese Finance Minister, Masajuro Shiokawa, has bowed to pressure from the country's business sector, and announced that the planned consolidated corporate tax will now be introduced as soon in fiscal 2002 as is possible.

Following a cabinet meeting last week, Mr Shiokawa told journalists: 'The bill for consolidated taxation will be enacted sometime after the beginning of next fiscal year, and it will be retroactive to the beginning of the fiscal year.'

The Minister has been backed into a corner somewhat over the issue of the consolidated corporate tax, which will allow profitable parent companies to avoid paying taxes if they are in the red on a group basis. The move, which is considered by Japanese businesses as essential to ensure their competitiveness on an international level, was originally scheduled for introduction at the beginning of 2002, but was then pushed back a year because of the amount of work involved, and has now been re-scheduled yet again.

Speaking at a meeting of the Upper House Financial Committee last week, Mr Shiokawa had originally told officials: 'I would like to submit a bill by the end of fiscal 2002/03, but it is a bit difficult to have one ready to go with the fiscal 2002/03 budget bill,' citing a manpower shortage in his ministry as one of the key problems in preparing the bill.

Recommended