European Parliament Library

Japan’s Corporate Income Tax :, Facts, Issues and Reform Options, Ruud A. Mooij, Ikuo Saito

This paper explores how corporate income tax reform can help Japan increase investment and boost potential growth. Using international and Japan-specific empirical estimates of corporate tax elasticities, investment is predicted to expand by around 0.4 percent for each point of rate reduction. International consensus estimates suggest further that between 10 and 30 percent of the static revenue loss could be recovered in the long run through dynamic scoring, although Japan’s offset may be closer to the lower bound. Compensating fiscal measures are necessary in light of Japan’s tight fiscal constraints. The scope for base broadening in the corporate income tax is found to be limited and some forms of base broadening will undo positive investment effects of a rate cut. Alternative revenue sources include higher consumption and property taxes. A gradual approach toward lowering tax rates mitigates windfall gains and reduces short-run revenue costs. An incremental allowance-for-corporate-equity system could boost investment with limited fiscal costs in the short run
Table Of Contents
Cover; Abstract; Contents; I. Introduction; II. Japan's Corporate Income Tax Distortions; A. High Statutory Tax Rate(s); Tables; 1. Statutory Corporate Income Tax Rate in Japan, as of April 2014; B. High Effective Tax Rates; Figures; 1. Statutory General Government CIT Rates; 2. Effective Marginal and Average Corporate Tax Rate, 2012; 3. Net Present Value of Depreciation, 2012; C. Significant Debt Bias; D. Arbitrage and Distortion for SMEs; 4. Cost of Capital by Financing Measure, 2012; 5. Tax Burden for Different Types of SMEs; E. Arbitrage and Distortion for Multinationals
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (45 p.)
Specific Material Designation
Form Of Item

Library Locations

  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR