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Company Formation Japan



Tax Incentives for Companies to Increase Wages for 2018 in Japan

Written by: Editor

The government and ruling bodies of Japan plan on holding thorough discussions in order to offer companies certain tax incentives to raise wages by 3 percentage or above in the fiscal 2018 tax reform measures. In this article, our company formation consultants in Japan further explain this news and different aspects related to these incentives.

What will these tax incentives in Japan consist of?

The tax incentives for companies to increase wages for 2018 in Japan include the development of a current program which allows businesses to deduct a percentage of their costs of the wages hikes from the corporate taxation, if certain conditions are met.
At the moment, large corporations can deduct maximum 12 pct of the wages hike costs in exchange for paying raises of 2 pct or in excess of 2 pct year-on-year. The maximum rate is set at 22 pct for small and mid-size businesses.
During the Council on Economic and Fiscal Policy meeting of last month, the Prime Minister of Japan declared that he wanted to achieve 3 pct wage hikes by means of “productivity revolution”. He also stated that there was new government support which supported company pay hikes.
Our company registration advisors in Japan can offer help in setting up a company in Japan in such favorable conditions.

Position of central bank in Japan

In the meantime, the central bank in this country is expected to approximately maintain its price forecasts during its policy meeting and it blames the current inflation on aspects such as the business efforts to increase productivity.
The Governor of the Bank of Japan is also expected to underline that the bank is not close to dialing back its huge stimulus program, with the inflation being far from its 2 pct target.
During its quarterly report of its projections, the Bank of Japan has slightly trimmed its inflation projections for this year ending in March 2018, from an estimated 1.1 pct made in July.
The bank is likely to maintain its price projections for the fiscal years of 2018 and 2019 and its view on the inflation reaching its target by March 2020.
With the Japanese economy looking good, the Bank of Japan officials explained recently the slow inflation as being caused by the efforts of the businesses to avert wage hikes by automating and streaming operations. Our Japan company formation agents can provide further details related to this subject.
If you would like to know more about the Japan bigger tax breaks for firms to hike wages, or for assistance in starting a company in Japan, we invite you to speak to our friendly staff.