Japan: Delay to tax rate increase for companies | KPMG | GLOBAL

Japan: Delay to tax rate changes for companies in Tokyo

Japan: Delay to tax rate changes for companies

The metropolitan government of Tokyo has proposed measures that would postpone the timing of amendments to local tax rates for businesses. The proposal will be discussed in the 2017 first ordinary session of the Tokyo metropolitan assembly (a session held from 22 February to 30 March 2017).

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As proposed, the tax rates in Tokyo for a company subject to size-based business taxes (broadly, a company with stated capital over JPY100 million) would be amended, and would reflect the delayed repeal of the special local corporation tax and the scheduled increase in business tax rates. The timing of the amendments to the business tax rates in Tokyo would be postponed from April 2017 to October 2019 under the proposal.

The timing for increasing the local corporation tax rate and decreasing the inhabitant tax rates would also be postponed by two and one-half years.

Background

The delay in the changes to local taxation follows action by the Japanese Diet in November 2016 to postpone an increase in the rate of the consumption tax in Japan. The national consumption tax rate had been scheduled to increase from 8% to 10%, but this increase was postponed by two and one-half years. Local taxation for companies had been scheduled to be amended when the increase in the rate of the national consumption tax was effective. Thus, the timing of the local taxation amendments has been affected.

 

Read a February 2017 report [PDF 144 KB] prepared by the KPMG member firm in Japan

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