1. Reducing burden of local corporate tax

1. (1) The special local corporate tax, a tentative measure until a consumption tax rate hike, should be abolished. If simple abolition is difficult, one of the options is to integrate all or part of the special local corporate tax, the corporate enterprise tax and the corporate inhabitant tax, particularly taxes levied on income, into the national corporation tax and then reduce them in stages as a growth strategy for the nation. Eventually, the effective corporate tax rates should be brought down to about 25%, a level equivalent to those of neighboring countries in Asia. The local governments should proactively allocate the amount collected by the state as corporate tax.

2. (2) The pro forma standard taxation system of the corporate enterprise tax should not be expanded.

3. (3) The fixed assets tax on depreciable assets is rare in foreign countries, and in particular, a tax on machinery and equipment has never been seen in neighboring countries in Asia, where Japanese manufacturers face competition. It should be promptly abolished or reduced because it goes against the investment promotion policy pressed forward by the government. Consistency should be ensured with the formula for calculation of taxable income of the corporation tax, at least through abolition of residual value. Assets with short serviceable life should be exempt from the tax.

4. (4) The business office tax should be abolished and the burden of the local tax on land should be reduced.

2. Simplification of local corporate tax system

1. (1) The following should be realized as quickly as possible:

   • Simplified calculation formula for local corporate tax
   • Reduction of paper work
   • Strengthen electronic filing system called eL-Tax
   • Improved visibility of the tax rates set by each local government

2. (2) Along with a start of the social security and tax number system, introduction of a system which enables corporations to pay the local tax in a lump-sum to prefectures where their head offices are located should be studied.