Big Firms with 3 Pct Pay Hike to Get Larger Tax Deductions
Tokyo, Dec. 8 (Jiji Press)--The Japanese government and ruling camp plan to expand tax deductions for companies that raise worker wages, while excluding those that are reluctant to carry out pay hikes from existing tax breaks for capital spending, it was learned Wednesday.
In its fiscal 2022 tax system reform proposals, the ruling bloc plans to set higher maximum tax deduction rates for large companies that raise wages by at least 3 pct and for small businesses that raise wages by 1.5 pct or more, informed sources said.
The steps are intended to help realize a virtuous cycle of economic growth and wealth redistribution, a signature policy of Prime Minister Fumio Kishida, also president of the ruling Liberal Democratic Party, the sources said.
The tax deduction system allows large companies that raise total wages of workers in continuing employment by at least 3 pct from the previous year to deduct 15 pct of the increase in wages from corporate taxes.
An additional deduction of 10 pct will be offered when wages are raised by 4 pct or more, and a further deduction of 5 pct will be granted if growth in education and training expenses is 20 pct or higher.
[Copyright The Jiji Press, Ltd.]