TOKYO (Reuters) – Japan may introduce measures to provide tax breaks for companies converting foreign profits into the yen and include it in the government’s annual mid-year policy blueprint compiled in the summer, the Sankei newspaper reported.
The tax holiday may be deployed as a policy tool to stem the yen’s sharp declines, incentivising firms to return overseas assets to Japan, the newspaper reported on Tuesday.
A finance ministry official was not immediately available for comment on Wednesday.
The yen has slumped about 11% against the dollar so far this year as currency traders bet Japanese interest rates will remain low for some time in contrast to relatively high U.S. interest rates.
The tax break would be applied for about 20 trillion yen ($126.74 billion) worth of “foreign direct investment earnings” from companies’ overseas subsidiaries, the Sankei reported.
Some government officials are sceptical, telling Reuters prior to the newspaper report that favourable tax treatment has already been in place and that additional measures are likely to have an impact.
($1=157.8000 yen)
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