Thursday, December 16, 2010

Japan Tax Cut for Corporates: Will it Get Enough Support?

Things are not that good for Japanese economy. Japanese government has approved a new tax system under which income tax for corporates will be decreased by 5%. Right now, Japanese corporate have to pay nearly 40% of their profit as income tax and it will become 35%. Of course, this system will have to be approved by the parliament.
Japanese government has made the guide lines to combat the economic problems at home. If approved the parliament then the new tax guide lines will be effective from 1 April 2011. You should know that Japanese fiscal year is counted from 1 April to 31st March.
Japan has one of the highest tax rates for the corporate and as a result many companies are unhappy and some of them are even actively considering taking their business away from Japan. This is not a good sign for the Japanese economy because the economy is suffering from various problems. The main problem for the country is lack of jobs or high rate of unemployment. After the economic recession ended, jobs have not come back and as a result there is still impact of recession. So, Japanese government is now trying desperately to ensure the creation of jobs.
Some of the opposition parties may oppose this idea and it may become in the end a bit tough for the Japanese government to pass the tax guidelines in the parliament.