Draft of Tax reform for year 2012 (1 - Reduced tax rate)

Friday, April 20, 2012 8:17 The Law to Revise the Income Tax in order to construct a Tax System addressing changes in the socio-economic structure, approved on November 30, 2011 has offered a 5% deduction of the current corporate tax rate. According to this law, the current corporate tax rate will be reduced from 30% to 25.5%, the current total taxes a company shall bear including the corporate tax, the inhabitant tax and enterprise tax will be reduced from 40.69% to 35.64% (see table below). Applicable period: companies whose fiscal year starting from April 1, 2012. Taxable incomeBefore tax reformAfter tax reform Reduced tax rate Corporate tax rate30%25.5%> Reform >4.5% Corporate effective tax rate40.69 % (42.05%)35.64% (37.11%)5.05% (4.94%) CompanyTaxable incomeCurrent tax rateReduced tax rate after tax reform Fiscal year beginning after Apri1 1, 2012Fiscal year beginning after Apri1 1, 2014 SME ※1> 8,000,000JPY22% (FY ending within 01/04/2009-31/03/2012: 18%)15% ※219% ≦ 8,000,000JPY30%25.5% Public Interest Incorporated Associations/Foundation; Cooperative (single entity); Specified medical corporation (single entity)≦ 8,000,000JPY22% (FY ending within 01/04/2009-31/03/2012: 18%)15% ※219% > 8,000,000JPY22% Cooperative (Consolidated entity); Specified medical corporation (Consolidated entity)≦ 8,000,000JPY23% (FY ending within 01/04/2009-31/03/2012: 19%)16% ※220% > 8,000,000JPY23% Specified cooperative and the similar entity> 1,000,000,000JPY26%22% SME: Small to medium size company ※ 1 SME also consist of general foundational juridical entity and association or foundation without juridical personality. ※ 2 The tax rate does not apply to those companies whose fiscal year starts before April 1, 2012 and ends on or after the same day.