The Osaka Prefectural Government said Thursday that it will slash as much as 90 percent off the corporate business tax it levies on new companies headquartered in the prefecture in a bid to attract more firms.

The plan marks the first move by a local government in Japan to reduce the corporate business tax, which is levied on corporate income.

The city government also said it will halve the real-estate acquisition tax for companies that acquire land for their businesses in a specific district in Osaka and start construction within a year.

The taxation system reform plans will be submitted to the local assembly when it convenes in February, it said.

Expected reforms include an increase to parts of the corporate inhabitant tax levied on firms capitalized at more than 10 million yen, it said.

Osaka Gov. Fusae Ota told a press conference that she expects the corporate tax cut plan, combined with the tax increase proposal, to be approved by the local assembly.

According to the proposals, corporate business tax on companies capitalized at 10 million yen or less will be reduced by 90 percent for manufacturers and information technology-related businesses and by 50 percent for other operators if they start businesses, with their headquarters in Osaka, within four years of April this year.

The Osaka government estimates the expected tax reduction to total between 100 million yen and 1.7 billion yen annually through fiscal 2008, which ends March 31, 2009.