InsideJapan News Network

Corporate tax in Japan is to be reduced by five per cent from April in an attempt to encourage more competitiveness within the economy.

Prime minister Naoto Kan took the step of ordering the tax reduction as part of the review of the tax system which will form the basis for figures used to set the 2011-12 state budget.

"By cutting corporate tax by five percentage points, businesses can expand domestic investment, boost jobs and increase workers' income," explained Mr Kan.

He added: "Investing in those areas will lift the domestic economy, facilitate economic growth and help overcome deflation. I plan to tell companies to invest in these areas actively."

The tax cut originally faced opposition from the trade ministry and the finance ministry believes that the reduction could result in a loss of 1.5 trillion yen (£11 billion).

Meanwhile, Reuters reports that the value of investment trust funds aimed at Japanese retail investors has reached a seven-month high due to an improvement in domestic share performances.

Written by Mark Smith.