By David Dolan
TOKYO (Reuters) - Japan needs to completely overhaul its tax system as part of the world's second-largest economy's push to revitalize its financial markets, the country's financial services minister said on Thursday.
Yoshimi Watanabe, who has been charged with boosting Tokyo's competitiveness as a global financial centre, also told the Reuters Investment Summit that Japan -- recently the target of overseas activist funds -- needs to be open to all investors, regardless of nationality.
Tokyo has recently rejigged the tax code so that offshore funds, which already pay tax in their home country, will no longer be taxed a second time in Japan.
Yet corporate tax, one of the highest among major economies and seen as discouraging to foreign investors, remains unchanged.
"The tax system has to be totally reformed," Watanabe said. "I have instructed my staff to study what should be done with taxation in order to improve Japan's financial market."
Japan's corporate tax rate of around 40 percent is higher than in other major economies -- it is around 30 percent in Britain, Germany and France for instance -- making it less attractive for foreign investment.
A government advisory panel in May called on the government to cut corporate taxes and implement more transparent rules for mergers and acquisitions.
Saddled with sluggish growth and a rapidly shrinking population, Japan is desperate for foreign investment and is especially keen to woo hedge funds, which managed an estimated $1.8 trillion globally at the end of March, according to Lipper Tass. Continued...
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