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Japan's ruling Liberal Democratic Party is examining the possibility of introducing measures to provide tax breaks for companies converting foreign profits into yen, two senior party officials told Reuters.

The tax holiday may be deployed as a policy tool to stem the yen's sharp declines, incentivizing firms to return overseas profits to Japan, according to the officials, who declined to be named as the information is not public yet.

The measures, if supported broadly, may be included in the government's annual mid-year policy blueprint compiled in the summer as part of the government's efforts to prop up the Japanese currency.

But the LDP is yet to kick off full-fledged discussions on such measures and the course of the policy talks remains unclear.

A finance ministry official was not immediately available for comment.

The yen has slumped about 11 percent against the dollar so far this year as currency traders bet Japanese interest rates will remain low for some time in contrast to relatively high US interest rates.

The tax break would be applied for about 20 trillion yen (HK$990 billion) of "foreign direct investment earnings" from companies' overseas subsidiaries, the Sankei Shimbun newspaper said.

Back in 2009, Japan introduced tax treatment for companies that excluded 95 percent of dividends earned from fore

Japan considers tax breaks to stem yen's decline