Overview
This research provides empirical analysis of the effects of Japan's corporate tax reform (growth-oriented corporate tax reform) implemented in phases from 2015-2018, using National Tax Agency corporate tax return data. The study examines the impact of corporate income tax rate reductions, loss carryforward deduction limitations, and additional value-added/capital taxation on growth company tax burdens.
**Reform Content and Objectives:**
- Corporate income tax rate reductions
- Loss carryforward deduction limitations
- Expansion of external standard taxation (value-added/capital additional taxation)
- Review of special tax measures
- Tax base expansion under revenue neutrality assumption
**Analysis Methodology:**
Effective Tax Rate (ETR) decomposed into the following components for analysis:
- Corporate income tax before special deductions / income
- Special deductions / income (investment tax credits, R&D tax credits, wage increase tax system, etc.)
- External standard taxation / pre-tax profit
- Income / pre-tax profit (tax base)
**Major Analysis Results:**
1. Large company ETR (average) increased post-reform (exceptionally decreased in FY2020)
2. Tax base expansion effects exceeded tax rate reduction effects
3. Special deduction utilization became difficult, reducing negative factors
4. High-growth company ETRs declined slightly in FY2015-2017 but followed average trends from FY2018 onward
**Policy Implications:**
- Reform was not designed as targeted tax burden reduction for growth companies
- Tax rate reductions provided tax reduction effects beyond growth companies
- Special tax measures were not changed to preferential measures for high-growth companies
- External standard taxation expansion did not contribute to long-term growth company tax burden reduction
**Future Challenges:**
From the perspective of long-term growth company preference, appropriate targeting through special tax measures is necessary. More strategic system design is required to achieve macroeconomic growth contribution through growth company tax burden reduction.
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This research provides empirical analysis of the effects of Japan's corporate tax reform (growth-oriented corporate tax reform) implemented in phases from 2015-2018, using National Tax Agency corporate tax return data. The study examines the impact of corporate income tax rate reductions, loss carryforward deduction limitations, and additional value-added/capital taxation on growth company tax burdens.
Reform Content and Objectives:
- Corporate income tax rate reductions
- Loss carryforward deduction limitations
- Expansion of external standard taxation (value-added/capital additional taxation)
- Review of special tax measures
- Tax base expansion under revenue neutrality assumption
Analysis Methodology:
Effective Tax Rate (ETR) decomposed into the following components for analysis:
- Corporate income tax before special deductions / income
- Special deductions / income (investment tax credits, R&D tax credits, wage increase tax system, etc.)
- External standard taxation / pre-tax profit
- Income / pre-tax profit (tax base)
Major Analysis Results:
- Large company ETR (average) increased post-reform (exceptionally decreased in FY2020)
- Tax base expansion effects exceeded tax rate reduction effects
- Special deduction utilization became difficult, reducing negative factors
- High-growth company ETRs declined slightly in FY2015-2017 but followed average trends from FY2018 onward
Policy Implications:
- Reform was not designed as targeted tax burden reduction for growth companies
- Tax rate reductions provided tax reduction effects beyond growth companies
- Special tax measures were not changed to preferential measures for high-growth companies
- External standard taxation expansion did not contribute to long-term growth company tax burden reduction
Future Challenges:
From the perspective of long-term growth company preference, appropriate targeting through special tax measures is necessary. More strategic system design is required to achieve macroeconomic growth contribution through growth company tax burden reduction.