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Japan's bank tax agreement ready

Shares in Mizuho Holdings are up sharply in Wednesday trade.
Shares in Mizuho Holdings are up sharply in Wednesday trade.

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TOKYO, Japan -- Tokyo's metropolitan government and 15 major banks are to lodge an agreement with the Supreme Court Wednesday that lowers the tax rate on banks' gross operating profits from 3 percent to 0.9 percent.

The impending settlement of their legal battle with the local government has lifted Japanese bank shares in recent days.

Mizuho Holdings, the world's biggest bank by assets, jumped 16 percent on Tuesday and is up another 10 percent in Wednesday trade to 243,000 yen.

Under the agreement, the Tokyo government will also offer a rebate on taxes paid in the financial year to March 2003. According to the Nihon Keizai business newspaper, this is expected to amount to about 234 billion yen ($2 billion).

When the bank tax was introduced in 2000, banks filed a lawsuit claiming the ordinance was invalid. After the Tokyo government lost the case in both the Tokyo District and High courts, both parties submitted appeals to the Supreme Court.

In July, the Tokyo government proposed settling the case.

On Thursday, the government will submit a bill to the Tokyo metropolitan assembly revising the bank taxation ordinance. Once the ordinance is revised, a report on the settlement will be drawn up in conjunction with the Supreme Court, according to the Nihon Keizai.

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