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O n O c to b e r 1, 2 0 1 3, the Japanese government formal- ly increased the consumption tax rate from the current 5% to 8% from April 1, 2014. It also provided a five-trillion yen (US$51B) economic stim- ulus policy to alleviate bur- dens from the consumption tax increase and avoid a nega- tive impact on the economy. This policy includes the ruling parties' outline of various tax cut measures for businesses that was released on the same day. The following summa- rizes the main corporate tax cuts and incentives.
Earlier repeal of special reconstruction tax. The 10% special reconstruction surtax on corporate tax was intro- duced in Apr il 2012 and inte nd e d to l ast for t hree years.7 The government has proposed repealing the tax a year early. Under this propos- al, the effective corporate tax rate (Tokyo area, including local taxes) would be reduced from 38.01% to 35.64% for tax years beginning after March 31, 2014. The government is a ls o cont e mpl at ing ot her measures to reduce the effec- tive corporate tax rate.
Tax incentives to promote capital expenditure on pro- ductivity-enhancing equip- me n t . Ac cordi ng to the proposed prov isions of an Industrial Competitiveness Enhancement Act, if produc- tivity-enhancing equipment is acquired and placed...