Kiedanren Calls For Stealth Business Tax To Be Dropped

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

07 January 2002

The Japanese Kiedanren (or Federation of Economic Organizations) has called for the government to drop an additional business tax designed to coincide with the introduction of consolidated group taxation in April.

Following the introduction of the consolidation corporate taxation system, group companies will be able to pay tax on the income of the consolidated profits and losses of their affiliates. However, in order to claw back some of the 800 billion yen which it is estimated will be lost in revenue as a result, the Japanese government plans to levy an additional 2% in tax for two years on organisations which choose to adopt this method of taxation.

According to a report in the Daily Yomiuri on Friday, the Kiedanren fears, justifiably, that this additional tax will discourage businesses from adopting the consolidated tax system.

Despite the fact that it is unusual for the body to contest a measure after it has been finalized by the ruling parties (which took place on December 14th), an unnamed source told the newspaper that the Kiedanren plans to contest the measure at every available opportunity, until the tax reform bills are submitted to the Diet in May.

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