The sun sets behind Mount Fuji and skyscrapers in Tokyo's Shinjuku area. Photo: Kazuhiro Nogi/AFP

Japan’s tax revenues are set to undershoot government forecasts this fiscal year, people with direct knowledge of the matter told Reuters, after a stronger yen trimmed corporate revenues.

For the year ending in March, the government now expects tax revenues to undershoot its initial forecast of 57.6 trillion yen (US$505 billion) by as much as 1 trillion yen, the sources told Reuters on Thursday.

Prime Minister Shinzo Abe spurred an economic recovery when he came to power in December 2012 via radical monetary easing, which sharply weakened the yen, and government spending that boosted demand.

But growth has slowed as the effects of the stimulus have ebbed and the yen strengthened earlier this year, crimping profits for companies in Japan’s export-reliant economy.