The Japanese government officially announced on 1st October 2013 its plan to modify “consumption tax” and “corporate income tax”. The highlights of the plan are summarized below:
Consumption tax:
In the period between 1 April 2014 and 30 September 2015, the rate of consumption tax will be increased from the current 5% rate to 8%. A further increase from 8% to 10% from 1 October 2015 is being considered and discussed. Transitional measures will be introduced to apply the current 5% rate to certain transactions even after 1 April 2014.
Corporate income tax:
It is proposed that the effective rate of corporate income tax will be reduced by abolition of the Special Reconstruction Corporation Tax a year ahead of schedule. If the proposal is adopted in December 2013, the effective corporate tax rate commencing on or after 1 April 2014 will be as follows:
| Rate (%) | |
| Corporation tax | 25.500 |
| Special local corporate tax | 4.292 |
| Business tax | 3.260 |
| Prefectural and municipal tax | 5.280 |
| Total tax | 38.332 |
| Effective rate | 35.640 |
