Change in SME definition for tax benefits to close loophole used by large companies
As part of its tax policy for 2017, the Japanese government plans to revise the tax system that givies preferential treatment to SMEs. Currently, companies with a capital smaller than 100 million yen (€721,000) enjoy lower tax rates. Much larger companies Japanese companies have enjoyed preferential tax rates by keeping their capital base small. This loophole was thrust in the limelight, when struggling electronics giant, Sharp was reported to consider its capital to under the 100 million threshold to enjoy a more favourable tax climate, reserved for SMEs.
The government plans to switch from the current capital based system to one based on sales or income. The Tokyo Chamber of Commerce and Industry, representing SMEs in Central Tokyo is working on a proposal to submit to the government later this year, and its nation-wide counterpart the Japanese Chamber fo Commerce and Industry is also reported to come with a proposal.