The Finance Ministry has decided to introduce a consolidated taxation system for companies and their wholly owned subsidiaries in fiscal 2002, ministry sources said Sunday.
The consolidated system is expected to reduce a company's tax burden by allowing it to base tax payments on the combined profits and losses of its entire group. It is also expected to promote corporate restructuring, including spinoffs of unprofitable divisions and the establishment of holding companies.
The new system will also allow companies to treat philanthropic and entertainment expenses as group losses.
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