Japan’s Abe Could Cut Corporate Tax Rate to 30% Early

Prime Minister Shinzo Abe vowed Wednesday to further cut Japan’s corporate tax rate in the next fiscal year starting April, paving the way for slashing the rate to below 30 percent at an early date to boost investment and wages.

He told a meeting of the Council on Economic and Fiscal Policy that the government will also improve conditions to help companies increase pay and minimum wages as requested by private-sector members of the panel.

“As for corporate tax reform, we will certainly add more deductions to the tax reduction” in fiscal 2016, paving the way for pulling down the effective corporate tax rate below 30 percent, Abe said.

In the meeting, members from academic and business circles urged the government to reduce the corporate income tax rate below 30 percent as early as next fiscal year from the current 32.11 percent, which is relatively high by international standards.

The government has already decided to lower the rate to 31.33 percent in fiscal 2016. But a further cut could be difficult to achieve, as the Finance Ministry is calling for securing financial resources to make up for lower tax revenue.

The private sector members also pointed to the need for companies to increase wages by a margin matching the 3 percent gain in nominal economic growth required to expand the nation’s gross domestic product to 600 trillion yen in about five years.

via Mainichi

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza