Abstract
According to a survey of business location costs conducted regularly by KPMG in ten countries (Australia, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, the UK, and the USA), costs in Japan were 99.2 % of those in the USA in 2014, having fallen drastically compared with 2012 (109.4 %) as a result of the weak yen. Business location costs include labor, facilities, transportation and distribution, utilities, depreciation, financing, and tax. The survey covered a range of sectors, including digital services, manufacturing, corporate services, and research and development. Within business location costs, this chapter focuses on taxation and attempts an international comparison. However, the aim is not a simple institutional comparison, but rather an examination of the state of Japan’s corporate taxation and its reform from an international perspective.
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Notes
- 1.
Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the UK.
- 2.
- 3.
This is the sum of national tax and local tax rates and adjusts for the deductible part of corporate income tax contributions.
- 4.
This system applies to corporations with 100 million yen or more of capital and is a tax payable on added value and capital on top of the income base. In 2011, corporations subject to it accounted for 1.2 % of all corporations, and the relevant tax paid accounted for 30.4 % of all corporate enterprise tax (Ministry of Internal Affairs and Communications, Local Tax Bureau (2013), p. 105).
- 5.
For prefectural inhabitants’ tax, the contribution amount is determined by the amount of capital, and for municipal inhabitants tax it is determined by the amount of capital as well as number of employees (Ministry of Internal Affairs and Communications, Local Tax Bureau (2013), p. 99).
- 6.
Lowering corporate tax rates and increasing the gap with income tax rates also creates incentive to incorporate. For this reason, there is a need to review lower tax rates for small- and medium-size corporations.
- 7.
Tax objects are land, buildings, and depreciable assets. These are taxed at the municipal levels. They accounted for 44.0 % of municipal tax revenue in the 2011 financial year.
- 8.
- 9.
CET is composed of corporate real estate tax (Cotisation Foncière des Entreprises, CFE) and corporate value-added tax (Cotisation sur la Valeur Ajoutée des Entreprises, CVAE). The proportion of the taxe professionnelle base accounted for by business real estate was replaced by CFE, and that accounted for by depreciable business assets was replaced by CVAE.
- 10.
The base of taxe professionnelle in 2009 was 17.7 % real estate rental value, 79.7 % depreciable asset rental value, and 2.6 % business revenue.
- 11.
The Japanese version of value-added tax, consumption tax, was increased from 5 % to 8 % in April 2014, and another increase to 10 % is planned for 2015.
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Shinohara, M. (2015). International Comparison of Corporate Taxation Systems. In: Ishikawa, T. (eds) Firms’ Location Selections and Regional Policy in the Global Economy. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55366-3_7
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