Japan to cut corporate tax to encourage wage, spending increases

December 9, 2017

Tokyo- The Japanese government said Friday it will lower the corporate tax rate effectively to some 25 percent from about 30 percent at present for companies that raise wages by 3 percent or more year on year and increase capital expenditures aggressively.

The tax rate will be lowered to as low as some 20 percent for companies working hard to raise wages and boost productivity using Internet of Things and other revolutionary technologies, it said.

The plan was included in a new economic package adopted by the cabinet of Prime Minister Shinzo Abe.

The tax cut is designed to put the Japanese economy on a path to a recovery led by growth in consumption by encouraging companies to accelerate efforts to improve productivity and increase wages.

The measure can help Japanese companies survive international competition, economic and fiscal policy minister Toshimitsu Motegi said.

He suggested that the government is considering a plan to impose heavier tax burdens on profitable companies unwilling to raise wages and increase capital spending.

The government aims to increase corporate capital spending by 10 percent by fiscal 2020 from the fiscal 2016 level. Jiji Press