8/13/2019 Japan Lowers Corporate Tax to Boost Economy in its 2014 Tax Reform Proposal

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Japan Lowers Corporate Tax to Boost Economy in its 2014 Tax Reform ProposalNair & Co. International Tax Consulting Team

(Bristol, UK) - The ruling parties of Japan have proposed changes to the effective Corporate Tax Rate on account of

abolishment of the special reconstruction surtax, as part of the 2014 Tax Reform Proposal. The 2014 tax reform bill

submitted to Diet (Japan's bicameral legislature) will be applicable from the taxable years starting from 1 April

2014, if passed.

The main objectives of the bill are to sustain the government’s efforts to reenergize the Japanese economy,

encourage investment by foreign entities and offer various tax cut measures for companies to boost the econom y

says Nair & Co. International Tax Consulting Team.

The most significant changes include:

Special Reconstruction Surtax – 10% surtax levied on corporate tax (i.e. 2.55%) is to be abolished one year

early i.e. from tax years commencing April 1, 2014. This surtax was introduced under the Tax Reform 2012 in

order to generate funds to reconstruct areas which were damaged during the March 2011 earthquake and

tsunami. Consumption Tax – The government has decided to increase the consumption tax rate to 8% (currently 5%)

effective 1 April 2014. Effective Corporate Tax Rate – After the repeal of the special reconstruction surtax, the effective corporate

tax rate will be reduced to 35.64% (currently 38.01%) effective 1 April 2014. National Corporate Tax Rate – This will remain unchanged i.e. 25.5%. Local Inhabitant Tax Rate – This will remain unchanged i.e. 5.2785% (20.7% on national corporate tax -

25.5%). Local Enterprise Tax Rate – This will remain unchanged i.e. 7.552% which also includes the special local

corporation tax.

Companies having operations in Japan or those planning to set base in the country may find the above proposals

beneficial due to reduction in the effective corporate tax rate. Such companies may also consider monitoring

further progress on the above proposals.

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Services team please contact us .

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8/13/2019 Japan Lowers Corporate Tax to Boost Economy in its 2014 Tax Reform Proposal

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