Japanese Government to Give Tax Breaks to Small Firms That Invest in Fixed Assets

The government is set to create a system to cut the rate of the fixed property tax levied on small- and medium-sized companies’ production machinery if they make investments in factories and equipment, government sources said.

The system, which will be introduced in fiscal 2016, is aimed at encouraging smaller businesses, most of which are in the red, to invest in plants and equipment by lessening the tax burden on these companies for three years.

Moreover, the effective rate of the corporate tax will be lowered from the current 32.11 percent to 29.74 percent in fiscal 2018.

A broad agreement on these tax cut plans was reached at a meeting of leading members of the ruling Liberal Democratic Party’s (LDP) Research Commission on the Tax System on Dec. 6. These decisions will be incorporated in the outline of the tax system reform for fiscal 2016.

The government of Prime Minister Shinzo Abe is poised to boost the economy by encouraging companies to invest in factories and equipment and support businesses in many other ways.

The tax system reform outline has almost been finalized except for a reduced consumption tax rate on daily necessities and a new automobile tax to be introduced when the consumption tax rate is raised from the current 8 percent to 10 percent in April 2017.

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