July 30, 2012
Major Japanese corporations’ tax burden ratio fell by 9.7 percentage points from 34.4% in 2003 to 24.7% in 2011, Akahata reported.
Utilizing the financial statements of the top 400 corporations, Akahata investigators calculated the ratio of the three corporate taxes they paid to profits before taxes.
Companies which paid less taxes compared with profits are: Mitsui & Co., Ltd. (9.1%), Sumitomo Co. (11.5%), and Mitsubishi Co. (11.5%). Sumitomo Chemical Co., Ltd., whose president is Japan Business Federation (Keidanren) Chairman Yonekura Hiromasa, paid 19.9%. Nissan Motor Co.,Ltd., which paid its CEO Carlos Ghosn executive pay of 970 million yen, paid 22.9% in taxes, and Toyota Motor Co. 30.8%.
The effective tax rate for large enterprises is around 40%. However, the tax burden ratio for corporations is lower than that because of various favorable tax loopholes for big businesses. For example, large companies can benefit from tax reductions for R&D spending and from the consolidated taxation system which allows a parent company and its wholly-owned subsidiaries to aggregate their profits and losses to calculate the amount of taxes.
In addition, in 2009, 95% of dividends from overseas subsidiaries were exempted from the taxes in compliance with the demand of Keidanren. Big companies which have subsidiaries abroad are in position to benefit from this scheme.
Japanese business circles are demanding corporation tax cuts by saying, “The corporate tax rate in Japan is too high.” But the tax burden ratio for corporations is far from too high. Rather, large corporations are paying much less in taxes than they should.
Utilizing the financial statements of the top 400 corporations, Akahata investigators calculated the ratio of the three corporate taxes they paid to profits before taxes.
Companies which paid less taxes compared with profits are: Mitsui & Co., Ltd. (9.1%), Sumitomo Co. (11.5%), and Mitsubishi Co. (11.5%). Sumitomo Chemical Co., Ltd., whose president is Japan Business Federation (Keidanren) Chairman Yonekura Hiromasa, paid 19.9%. Nissan Motor Co.,Ltd., which paid its CEO Carlos Ghosn executive pay of 970 million yen, paid 22.9% in taxes, and Toyota Motor Co. 30.8%.
The effective tax rate for large enterprises is around 40%. However, the tax burden ratio for corporations is lower than that because of various favorable tax loopholes for big businesses. For example, large companies can benefit from tax reductions for R&D spending and from the consolidated taxation system which allows a parent company and its wholly-owned subsidiaries to aggregate their profits and losses to calculate the amount of taxes.
In addition, in 2009, 95% of dividends from overseas subsidiaries were exempted from the taxes in compliance with the demand of Keidanren. Big companies which have subsidiaries abroad are in position to benefit from this scheme.
Japanese business circles are demanding corporation tax cuts by saying, “The corporate tax rate in Japan is too high.” But the tax burden ratio for corporations is far from too high. Rather, large corporations are paying much less in taxes than they should.
