As a result of the recent tax reform in the United States, federal corporate tax will be reduced from 35 per cent to 21 per cent. There appear to be differences between states, but the corporate effective tax rate will decline to 27.98 per cent, making the U.S. tax rate advantageous compared to Japan’s 29.74 per cent. We still need to scrutinize the final proposal detailing matters such as the ways in which the tax base will be expanded, but it is my understanding that for companies doing business in the U.S. market the reduction in the corporate tax rate is a positive factor that will benefit them directly.
Keidanren has consistently called for Japan’s corporate effective tax rate to be lowered to the OECD average of around 25 per cent. In light of the recent corporate tax reform in the United States, we will continue requesting and urging the Japanese government to act. How any tax cut would be funded is a matter for future discussion, and it is of course necessary to consider such funding in the context of the national budget and of compatibility with fiscal consolidation.