Niigata-based start-up Toki Air announced that it will propose reducing its stated capital at its next shareholders’ meeting which will be held on March 26, 2024. The company plans to do so to become a “small- and medium-sized business” eligible for a reduced corporate tax rate.
The qualification criteria to be considered a small- and medium-sized business for official purposes in Japan depends on the type of business a company is engaged in. In the case of service business, the company needs to have a stated capital of less than 50 million yen or less than 100 employees. Additionally, to be eligible for the small- and medium-sized business reduced corporate tax rate, the business needs to have a stated capital of less than 100 million yen.
As of March 1, 2023, Toki Air had a stated capital of 1.76 billion yen and on February 28, 2024, it announced it reduced it by 480,360,000 yen.
The upcoming reduction (presumably to under 100 million yen) will have no material effect on the company’s business or balance sheet and will be just a formality instead.