Japan's fiscal 2016 tax revenue came in around 2.1 trillion yen ($18.5 billion) below the initial forecast, casting doubt over Prime Minister Shinzo Abe's plan to replenish government coffers by spurring growth in the corporate sector.

This was the country's first drop in tax revenue in seven years, falling by 800 billion yen from the previous year to roughly 55.4 trillion yen, the Ministry of Finance announced Wednesday. When the government drew up the budget in December 2015, it estimated fiscal 2016 tax revenue at 57.6 trillion yen. In January 2017, that figure was revised down by 1.7 trillion yen and again later by 400 billion. The ministry has blamed the decline largely on special factors. But critics say the government's projections were overly optimistic.

Corporate tax revenue, in particular, fell short, falling 1 trillion yen below projections. The economy is doing well, and corporate earnings are not falling. But Japan Inc.'s earnings structure has changed drastically, making it unlikely that strong company performance translates into higher tax receipts.

When a Japanese parent company receives dividends from a subsidiary overseas, the foreign dividend is almost entirely tax-exempt in order to avoid taxation by authorities from both countries. When treated as taxable income, 95% of dividends are taxed.

In fiscal 2015, the amount excluded from taxable income, including foreign dividends and other revenues, rose 5% to 6.17 trillion yen. That is a 57% increase since fiscal 2011, rising at a faster pace than listed companies' pretax profit. Improved earnings at Japan Inc. will unlikely be reflected in tax revenue should companies continue to expand their presence abroad.