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IMF Warns Japan On Planned Sales Tax Hike

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

04 August 2017


Japan intends to proceed with a proposed increased by its sales tax in 2019, despite warnings from the International Monetary Fund that the economy could severely contract.

In its latest consultations with Japan, the Fund said that hiking the sales tax by two percent to 10 percent would likely hit the economy significantly, given the reaction to the earlier hike to eight percent.

It instead recommended that country gradually increase the tax by 0.5-1.0 percentage points over regular intervals until the rate reaches at least 15 percent, "while preserving the unitary structure of the tax."

The IMF also recommended that Japan introduce an asset tax, undertake property tax reform, or strengthen the personal income tax system "to supplement the consumption tax in a growth friendly manner."

TAGS: environment | tax | value added tax (VAT) | property tax | tax incentives | International Monetary Fund (IMF) | corporation tax | tax reform | penalties | Japan | Other

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