Kan Signals Corporate Tax Cut

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

19 October 2010

Japanese prime minister Naoto Kan has told the house of representatives' budget committee that his government was looking into reducing the corporate tax rate alongside a “broadening of the tax base”, believed to be a reference to an increase in the VAT rate.

In September Kan set up an economic panel to advise the government by year's end on the best means of providing corporate tax and other incentives to boost growth. The budget process for each fiscal year usually concludes in December, by which time the panel should have completed its deliberations.

The issues under consideration by the panel were to include:

• The correct level of corporate income tax needed to improve international competitiveness and encourage foreign inward investment with a focus on effective corporate tax rates, and the burden of other taxes impinging on companies, including national and local taxes;
• How to encourage consumer and business spending; and
• How to deepen ties with fast-growing Asian economies and secure involvement in foreign infrastructure development.

In June, the Japanese government launched a new growth strategy with a key objective to halve the effective rate of total corporate taxes from above 40% to nearer 20% of income.

Recommended