Tax breaks mulled for firms raising wages, investing more

November 22, 2017

Tokyo- Japan's government and ruling camp are considering expanding tax breaks for companies active in boosting wages and capital expenditures, informed sources said Tuesday.

Meanwhile, the Liberal Democratic Party-led government is likely to disqualify companies unwilling to make such moves from getting tax incentives, the sources said.

The plan is being considered as part of the country's tax system reforms for fiscal 2018, which starts next April.

The government will keep the country's effective corporate tax rate unchanged at 29.74 percent in fiscal 2018. But it is poised to lower effective tax burdens to some 25 percent for companies positive about increasing wages and investment, the sources said.

In the fiscal 2018 reforms, the government is also seen exempting small companies from fixed property tax payments for newly introduced facilities and equipment, expanding the current preferential treatment of a 50 percent tax cut.

The government hopes these steps will encourage companies to utilize their internal reserves for raising wages and capital expenditures, helping the country put deflation clearly behind it and improve productivity, the sources said.

The government plans to compile an economic package in early December that will include measures to realize a productivity "revolution," a key policy of Prime Minister Shinzo Abe's administration. Jiji Press