Author Name | HOSONO Kaoru (Faculty Fellow, RIETI) / HOTEI Masaki (Daito Bunka University) / MIYAKAWA Daisuke (Waseda University) |
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Creation Date/NO. | August 2025 25-E-072 |
Research Project | Firm Dynamics, Industry, and Macroeconomy |
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Abstract
Using tax filing data of Japanese business enterprises from 2014 to 2020, we investigate how the 2015-2018 tax reforms in Japan affected the average tax burden and whether the reforms benefited growing firms or not. We first calculate backward-looking effective tax rates (ETRs) and then estimate the sensitivity of the ETR and its components with respect to firm sales growth, R&D intensity, and other characteristics. Our findings are as follows. First, the average ETR increased after the reform. Second, compared with the average ETR, ETRs for growing and R&D-intensive firms initially decreased, but then began to increase. The reforms did not benefit growing firms in the long run due to the expansion of tax bases.