Evaluating Japan's Corporate Income Tax Reform using Firm-specific Effective Tax Rates

Toshiyuki Uemura ()
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Toshiyuki Uemura: School of Economics, Kwansei Gakuin University

No 226, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This study evaluates Japan's corporate tax reforms in the 2010s by estimating the effective average tax rate (EATR) and effective marginal tax rate (EMTR), common methods for international comparisons, using data on Japanese firms. Japan lowered its statutory tax rate while it expanded the tax base. The estimated EATR and EMTR declined in Japan, though the EATR decreased less than the statutory tax rate. This was due to the depreciation method reform. This study analyzes the differing effects of the tax rate reduction and depreciation method reform by conducting simulations to represent the effects of each reform on the EATR and EMTR. Japan’s tax reform in the 2010s lowered the EATR via the lower tax rate, while it raised the EMTR via the depreciation method reform.

Keywords: Corporate income tax; Firm-specific effective tax rates; Effective average tax rates; Effective marginal tax rates (search for similar items in EconPapers)
JEL-codes: H25 H87 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2021-06
New Economics Papers: this item is included in nep-acc and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:226

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