Japan Govt Mulling Special Tax Benefits for Japan Post

The Japanese government is considering giving Japan Post special tax benefits when the public corporation is privatized in April 2007, informed sources said Friday.

Specifically, the government plans to allow the deferment of payments of asset transfer tax after the privatization. It is also considering reduced registration license tax, real estate acquisition tax and stamp tax, the sources said.

The special tax treatment is intended as a transitional measure to achieve a smooth privatization. Japan Post has 400 trillion yen of assets, and a huge amount of taxes would have to be paid without such a favor when the assets are formally transferred to companies to be created from the privatization.

The government gave such special tax treatment to railroad operators that were created through the privatization of the state-run railway operator in 1987.

Meanwhile, the government will not reduce corporate tax payments by the private firms that will take over from Japan Post, the sources said.

Such treatment would go against the principle in privatizing Japan Post of setting equal conditions for competition, a senior Finance Ministry official said.