Finance Minister Masajuro Shiokawa said Thursday that a proposed consolidated taxation system for companies will be delayed by one year, indicating its introduction would radically cut tax revenue.
The bill to enable the introduction of the system will be submitted to the Diet in fiscal 2002 for a launch in fiscal 2003 at the earliest, he said.
The Finance Ministry initially planned to introduce the system in April 2002. Under the plan, individual companies in a group would not pay corporate tax, as a consolidated tax would be levied on the group as a whole.
The ministry decided to postpone the introduction because it fears it would further deplete already falling tax revenues.
The ministry estimated Japan's tax revenues in fiscal 2002 would decline by 800 billion yen if the system were introduced in April.
Tax revenues for next fiscal year will be around 47.6 trillion yen -- 2.8 trillion yen less than the 50.4 trillion yen projected in the midterm fiscal outlook, the ministry estimates.
To compensate for the expected revenue falls, the ministry considered imposing a 2 percent to 3 percent surcharge on corporate taxes for companies that adopt the new system.