Japan Eyes New Levy to Offset Corporate Tax Cut

Tokyo, June 24 (Jiji Press)--The Japanese government's tax panel is set to propose the introduction of a new tax to help cover revenue shortfalls stemming from a planned cut in the nation's effective corporate tax rate, Jiji Press learned Tuesday. The new tax idea is part of a final draft of the Tax Commission's coming report on measures to overhaul the country's corporate tax system. The commission is slated to hold detailed discussions on Wednesday before finalizing the report at its general meeting on Friday. The final draft says that the government should consider a possibility of introducing a new tax, citing bank taxes adopted in European countries. The draft also calls for expanding the existing size-based business tax, a local levy, to cover firms with capital of 100 million yen or less as well. The tax, which is levied even on loss-making companies, currently covers firms capitalized at over 100 million yen. On Tuesday, the cabinet of Prime Minister Shinzo Abe approved a plan to lower the effective corporate tax rate to below 30 pct from the current levels of about 35 pct in stages from fiscal 2015. The government plans to draw up details on how to make up for the revenue loss from the corporate tax cut in full-fledged tax system reform talks late this year. END