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31 Dec 2014
Japan: ruling coalition's outline for FY15 tax system reforms – Nomura
FXStreet (Barcelona) - The Research Team at Nomura share that the corporation tax cut plan was approved by the ruling coalition, further adding that these tax reforms were mainly designed provide companies with incentives to hike wages.
Key Quotes
“The ruling coalition agreed to the outline of FY15 tax system reforms on 30 December. Although it contained a large number of tax cuts, we would not describe it as a major tax cutting program overall. In our opinion, these reforms are primarily designed to provide improved incentives for the promotion of Abenomics, rather than delivering substantial tax cuts.”
“Cuts in the effective rate of corporation tax have attracted strong attention as a way of boosting the competitiveness of Japanese companies. The ruling coalition said that it will be looking to cut it by 2.51ppt in FY15 and by a total of 3.29ppt by FY16. It also said that it would be looking at further cuts in FY16 tax system reforms, in order to bring it below 30% within a few years.”
“With a large proportion of this tax cut cancelled out by moves to broaden the tax base, it looks as though this tax cut will effectively be worth around ¥400bn over two years. As it will be of greater benefit to profitable companies, we think it will provide the corporate sector with greater incentives to increase its earnings.”
“The ruling coalition agreed to the outline of FY15 tax system reforms on 30 December. Although it contained a large number of tax cuts, we would not describe it as a major tax cutting program overall. In our opinion, these reforms are primarily designed to provide improved incentives for the promotion of Abenomics, rather than delivering substantial tax cuts.”
Key Quotes
“The ruling coalition agreed to the outline of FY15 tax system reforms on 30 December. Although it contained a large number of tax cuts, we would not describe it as a major tax cutting program overall. In our opinion, these reforms are primarily designed to provide improved incentives for the promotion of Abenomics, rather than delivering substantial tax cuts.”
“Cuts in the effective rate of corporation tax have attracted strong attention as a way of boosting the competitiveness of Japanese companies. The ruling coalition said that it will be looking to cut it by 2.51ppt in FY15 and by a total of 3.29ppt by FY16. It also said that it would be looking at further cuts in FY16 tax system reforms, in order to bring it below 30% within a few years.”
“With a large proportion of this tax cut cancelled out by moves to broaden the tax base, it looks as though this tax cut will effectively be worth around ¥400bn over two years. As it will be of greater benefit to profitable companies, we think it will provide the corporate sector with greater incentives to increase its earnings.”
“The ruling coalition agreed to the outline of FY15 tax system reforms on 30 December. Although it contained a large number of tax cuts, we would not describe it as a major tax cutting program overall. In our opinion, these reforms are primarily designed to provide improved incentives for the promotion of Abenomics, rather than delivering substantial tax cuts.”