TOKYO — Japan collected more taxes in fiscal 2020 than the government had expected, with revenue coming in higher than fiscal 2019’s pre-pandemic figure, helped by a limited impact on corporate earnings, Nikkei has learned.
Japan’s tax revenue exceeded 58 trillion yen ($523 billion), beating the government’s expectations by over 3 trillion yen, sources said. The total is higher than the 2019 revenue of 58.4 trillion yen, which had dropped by about 2 trillion yen from a record 60.4 trillion yen in fiscal 2018.
The exact tax figure was not divulged to Nikkei. The finance ministry is expected to announce official figures in early July.
Initially, the government had expected to collect 63.5 trillion yen in tax for fiscal 2020, but lowered its forecast in December to 55.1 trillion yen as the pandemic depressed consumer spending and corporate earnings.
But the pandemic’s impact on the economy was less pronounced than the government had expected. Consumption tax receipts increased in fiscal 2020 after the rate was raised to 10% from 8% in October 2019. Corporate tax revenue also surpassed expectations as Japanese companies benefited from economic recoveries in the U.S. and China.
Pretax profits at companies, excluding financial and insurance businesses, dropped by 46.6% in the April-June 2020 quarter from the same period the previous year. But business started to pick up toward the end of the year, and corporate earnings increased by 26% in the January-March 2021 quarter.
While some sectors such as restaurants and hospitality continue to see earnings decline, the manufacturing industry recorded an increase of 63.2% in pretax profits in the January-March period from the same period of the previous year.
During the financial crisis triggered by the collapse of Lehman Brothers, Japan’s tax revenue plunged to 38.7 trillion yen in fiscal 2009, less than half of the 2008 level. This time, corporate tax revenue through April only declined by 10% on the year.
The consumption tax hike was a major contributing factor to the relatively high tax revenue. Consumption tax revenue through the end of April was 16.7 trillion yen, 10% higher than the same period in the previous year. Income tax also slightly surpassed the previous year, reaching 17.7 trillion yen.