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OECD Urges Japan To Hike Sales Tax

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

13 April 2017


Japan should hike value-added tax and taxes on income, capital gains, and inheritances, to offset the revenue lost from corporate tax cuts, the OECD has said.

The country reduced its corporate income tax rate to 29.97 percent from 32.11 percent in 2016 and plans to reduce the levy to 29.74 percent in 2018.

Japan is planning to hike VAT to 10 percent in 2019, after deferring the move twice. However, according to the OECD, to meet debt reduction targets, Japan should eye a 22 percent headline tax rate.

The OECD said plans to introduce other rates of VAT below the 10 percent headline rate would benefit high-income households most.

Japan could also tackles imbalances in its tax system by increasing personal income taxes and addressing exemptions, the OECD said. Meanwhile, there is scope for Japan to increase environmental taxes to help the country meet its emissions targets, it said.

"To maintain confidence in Japan's public finances, the implementation of a more detailed and credible consolidation path that contains specific spending cuts and tax increases is essential," the OECD said.

TAGS: inheritance tax | environment | tax | value added tax (VAT) | environmental tax | tax rates | Japan | Europe | Tax

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