AFP, Tokyo :
Tokyo said Friday it was slashing Japan’s corporate tax rate, one of the world’s highest, as the country’s top central banker called for speedier reforms to unshackle an economy long mired in red tape.
The cuts would bring the levy under 30 percent within a few years, resulting in a tax rate ranging from 20 percent to 29 percent, depending on the jurisdiction.
Company taxes, including a rate of 35.6 percent in Tokyo, are the second- highest in the Organisation for Economic Cooperation and Development (OECD) behind the United States, which some critics say has held back the world’s number three economy.
Japan’s levy is made up of both national and local taxes.
Tokyo is cutting the national rate to bring down firms’ overall burden in a bid to stimulate hiring and corporate investment, as Prime Minister Shinzo Abe faces growing pressure to deregulate politically powerful sectors, including the agricultural industry.
“We’re aiming to reduce the effective corporate tax rate… within a few years,” Abe told reporters in Tokyo, adding that reductions would start from the fiscal year beginning in March 2015.
The conservative premier-who swept to power in late 2012 on a pledge to rescue Japan from years of deflation-said his government wanted to “send a clear message” with the tax cuts.
“Japan’s corporate tax will become growth-oriented… to help boost jobs and improve people’s livelihoods,” he said.
Abe is facing calls to make good on the final tranche of his growth action plan, dubbed “Abenomics”, which started in early 2013 with a huge public spending spree and an unprecedented monetary easing campaign by the Bank of Japan.
That gave the economy a shot in the arm and set off a stock market rally as firms’ profitability grew on the back of a sharply weaker yen.
