Japan Press Weekly

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2013 July 10 - 16 [POLITICS]

Big companies make more profits and pay less tax

The top 20 most profitable Japanese companies’ corporate tax burden ratio for the last eight years was less than 30% on average.

Akahata on July 10 reported this fact based on its calculation using these companies’ financial statements.

Corporations are originally levied on their income about 38% in taxes including the corporate tax (national tax), the corporate inhabitant tax and enterprise tax (local taxes), and the special reconstruction corporate tax.

However, taxes the top 20 companies paid between 2005 and 2012 averaged 29.9%.

Among the 20 companies, Mitsui & Co., Ltd. paid 6.3% in taxes on its profits while Mitsubishi Electric Corporation paid 9.5% in taxes. The tax burden ratio of Nissan Motor Co., Ltd., which paid its CEO Carlos Ghosn an executive salary of 988 million yen, was 16%. Even Toyota Motor Co., which increased its profits with the depreciation of the yen, paid 26.1% in taxes.

The reason for this is that the government gives various favorable tax breaks to large corporations. For example, tax subsidies for corporate R&D in FY 2011 amounted to 338.6 billion yen, and 84.9% of this subsidy went to large corporations and consolidated groups with a capital of 1billion yen.

The Abe government this fiscal year has provided yet another tax cut to encourage corporate investment and increased the R&D subsidies. Furthermore, the ruling Liberal Democratic Party in its Upper House election policy calls for a drastic reduction in taxes on corporate investment and income.