Incentive Programs
Foreign Direct Investment in Japan
| Title | Overview | The Competent Authorities |
|---|---|---|
Act for Promotion of Japan as an Asian Business Center 
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Promotion Act on special measures to support global companies that conduct a new R&D project or control operation in Japan in order to promote the attraction of global companies' R&D and supervisory bases to Japan. |
Investment Facilitation Division, Trade and Economic Cooperation Bureau, Ministry of Economy, Trade and Industry |
Local business
Tax incentives for strengthening local business facilities
For cases which satisfy the outlined requirements, "tax incentives for strengthening local business facilities" are available for companies opening or expanding headquarters functions* such as branch offices and research laboratories in local areas (with the exception of a few areas) outside of the Tokyo Metropolitan Area, through foreign direct investment, or foreign-affiliated companies relocating their headquarters function from the 23 wards of Tokyo to regions other than the Tokyo Metropolitan Area.
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Headquarters functions indicate an "office," "laboratory" or “training institute."
Prerequisites for qualifying for tax breaks
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1.
Areas in which tax incentives area available for the establishment, expansion or relocation of headquarters are designated as those areas within each prefecture (Regional Revitalization Areas) where the establishment, expansion or relocation of headquarters are being promoted, and do not include non-target regions* for this support.
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2.
Before beginning construction for the opening, expanding or relocating of the headquarters, companies must first create a plan for establishing, expanding or relocating the headquarters (a Regional Vitality Improvement Plan for Specific Business Facilities) and then obtain certification from the relevant prefecture.
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Non-target regions for support: in principle, large central urban areas in the Tokyo Metropolitan Area, Chubu and Kansai regions. However, since the tax reform of fiscal year 2018, central areas of the Chubu and Kansai regions have become eligible for support in the case of relocating headquarters functions from the 23 wards of Tokyo.
Please be sure to contact the prefecture where your company is considering the opening, expansion or relocation since a variety of requirements must be met in order to obtain certification from the prefecture.
| Title | In the case of establishment or expansion headquarters functions within regional revitalization areas (including foreign direct investment in Japan) | In the case of relocating headquarters functions within regional revitalization areas from the 23 wards of Tokyo | The Competent authorities |
|---|---|---|---|
| Employment promotion taxation |
Tax credit of up to 600,000 JPY per new employee.
Application requirements have been eased since FY2018. See pages 2, 3 and 19 of the PDF “雇用促進計画の手続きパンフレット（平成30年度以降に適用年度が開始する場合” （booklet of procedures for application of employment promotion plan [in the case that application starts in FY2018]) , which is in the corner “利用手続きの詳細” (details of procedures for utilization) of the webpage “雇用促進税制 |
Tax credit of up to 900,000 JPY per new employee.
Application requirements have been eased since FY2018. See pages 2, 3 and 19 of the PDF “雇用促進計画の手続きパンフレット（平成30年度以降に適用年度が開始する場合” （booklet of procedures for application of employment promotion plan [in the case that application starts in FY2018]) , which is in the corner “利用手続きの詳細” (details of procedures for utilization) of the webpage “雇用促進税制 |
Office for Promotion of Overcoming Population Decline and Vitalizing Local Economy in Japan, Cabinet Office (Employment Policy Division, Employment Security Bureau, Ministry of Health, Labor and Welfare) *Japanese only |
| Capital investment tax cut (tax cut for offices) |
Target: Buildings, attached facilities and structures of specific business facilities(headquarters function) Acquisition price: 20 million yen or more (10 million yen or more for small and medium enterprises) Tax measures: 15% special depreciation or 4% tax deduction on the acquisition value of specified business facilities
See the the PDF "（パンフレット）地方拠点強化” (booklet of tax incentives for strengthening local business facilities) which is in the corner “地方拠点強化税制について” (regarding tax incentives for strengthening local business facilities) of the webpage “地方拠点強化税制 |
Target: Buildings, attached facilities and structures of specific business facilities(headquarters function) Acquisition cost: 20 million yen or more (10 million yen or more for small and medium enterprises) Tax measures: 25% special depreciation or 7% tax deduction on the acquisition value of specified business facilities
See the the PDF "（パンフレット）地方拠点強化” (booklet of tax incentives for strengthening local business facilities) which is in the corner “地方拠点強化税制について” (regarding tax incentives for strengthening local business facilities) of the webpage “地方拠点強化税制 |
Office for Promotion of Overcoming Population Decline and Vitalizing Local Economy in Japan, Cabinet Office (Regional Business Innovation Promotion Division, Regional Economic and Industrial Policy Group, Economic And Industrial Policy Bureau, Ministry of Economy, Trade and Industry) *Japanese only |
| Tax exemption or unequal taxation of local taxes | Certified companies may be able to receive exemptions or reductions on enterprise taxes on corporation (only in the case that a relocation occurs from Tokyo’s 23 wards), property acquisition taxes, and property taxes by local authorities. | Local authorities of designation of relocation, or expansion | |
Incentives regarding Special Zones
| Title | Overview | The Competent Authorities |
|---|---|---|
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National Strategic Special Zone *Japanese only |
Special regulatory measures, tax treatment (for corporate income tax), and financial/monetary support are available for companies with business plans in National Strategic Special Zones. |
Headquarters for the Regional Revitalization Cabinet Office, Governments of Japan *Japanese only |
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Comprehensive Special Zones *View "English" |
Special regulatory measures, tax credit (for corporate income tax), and fiscal/financial support are available for companies with business plans in designated zones. CSZs have two types: those for international competitiveness and those for local revitalization. CSZs aim at providing tailored, integrated support for comprehensive and strategic challenges in selected regions. |
Headquarters for the Regional Revitalization Cabinet Office, Governments of Japan *Japanese only |
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Special Zones for Reconstruction
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Special measures such as deregulation, tax incentives, etc. are available for companies with business plans in disaster afflicted areas. |
Reconstruction Agency
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Tax Deduction System based on the Regional Future Investment Promotion Act
（Regional Future Investment Promotion Taxation）
A tax deduction system for projects which create high added value in utilizing advantages of local regions and with which a ripple effect on local economies can be expected, on the condition that they are confirmed as projects which will particularly contribute to strengthening the basis of regional economic growth, in accordance with standards set by the competent minister.
- Target regions
- Target areas of the basic plan prepared by relevant prefectures and municipalities (project promotion areas) (Japanese only)
| Title | Overview | The Competent Authorities |
|---|---|---|
|
Special taxation measure regarding capital investment (Japanese only) See the corner ”税制支援”(tax-based support) |
Procedure: Foreign-affiliated companies can also use this system, on the condition that they prepare a “project of business which can stimulate the local economy’’ in accordance with the basic plans prepared by the relevant prefecture and municipality, obtain the approval of the prefecture for the project and receive confirmation from the competent minister pursuant to the provision. Target: Capital investment done in accordance with an approved business plan (and requiring confirmation pursuant to article 24 of the act) Taxation measures:
Total acquisition cost subject to support: 8 billion yen Maximum amount of tax deduction: 20% of the amount of corporate or income tax in the period concerned |
Business Environment Promotion Division, Regional Economic and Industrial Policy Group, Ministry of Economy, Trade, and Industry |
| Tax exemption or unequal taxation of local taxes | Confirmed companies (requiring confirmation pursuant to article 24 of the act) may be able to receive exemptions or reductions on property acquisition taxes and property taxes by local authorities. | Local authorities |
Subsidies for new business establishment and employment creation in areas recovering from the tsunami and nuclear disaster
| Title | Overview | The Competent Authorities |
|---|---|---|
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Subsidy Program for New Business Establishment in the Areas Recovering from Tsunami and Nuclear Disaster towards Employment Creation [Manufacturing business site location support project] *Japanese only |
A subsidy program to support companies that are constructing or expanding plants or factories so as to activate the regional economy through employment creation in the areas (excluding evacuation order areas) in Fukushima prefecture affected by the Great East Japan Earthquake. |
Firm location section, Commercial and industrial Labor Relations Division, Fukushima Prefecture |
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Subsidy for Business Location to Support Self-Reliance and Return, and Create Employment
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A subsidy program for evacuation-ordered areas, etc. that were severely damaged by the nuclear disaster, which is intended to support companies that build new or additional factories, etc., in order to secure workplaces for disaster victims, to accelerate their future self-reliance and return home and industrial recovery, to create employment and industrial accumulation, and to promote commercial recovery to encourage residents to return and industries to locate in these areas. |
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Fukushima Industry Enhancement Company Siting Promotion Subsidy
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A program to provide subsidies within the budget to companies in Fukushima prefecture that are expected to have future and growth potential and to contribute to the local economy and regional development in order to contribute to the revitalization of the local economy by expanding production and creating employment for private companies such as manufacturers in the prefecture. |
| Title | Subsidized Projects | Eligible Costs |
Subsidy Rates/ Maximum Amount |
The Competent Authorities | |
|---|---|---|---|---|---|
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Subsidies for Employment toward Reconstruction of Industry in Fukushima *Japanese only
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Employment costs | Subsidies for employment of disaster victims by enterprises designated by the Fukushima Prefectural Government as recipients of subsidies and finances provided by the national government or local governments. | Expenses for employing disaster victims seeking employment |
Up to 1.2 million yen for three years per employee hired for SMEs within Fukushima Prefecture. Up to 2.25 million yen for three years per employee hired for companies large to small in 15 afflicted cities, towns, or villages. The cap on the employment subsidy is placed at 20 million yen for three years per enterprise. |
Section in charge of grants, Employment Administration Division, Commercial and industrial Labor Relations Department, Fukushima Prefecture
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| Costs of housing support | Subsidies for housing allowances and expenses related to company-rented houses or apartment buildings for enterprises designated by the Fukushima Prefectural Government as recipients of subsidies and finances provided by the national government or local governments that have improved the workplace environment and secured and maintained employment by introducing housing support. | Housing allowances and expenses related to company-rented houses or apartment buildings |
Subsidies will amount to 3/4 of expenses eligible for subsidization. Maximum subsidy per enterprise: 2.4 million yen per year. The cap on the subsidy is placed at 7.2 million yen for three years per enterprise. |
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Preferential tax treatment for special zone
| Title | Overview |
|---|---|
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Special Zone for Promoting Investment in Reconstruction of Industry in Fukushima |
Companies who contribute to maintaining employment opportunities in reconstruction industry accumulation area are eligible to apply for special tax measures when they made capital investment or employed disaster victims. Specific types of industries in Fukushima industry revival investment promotion special ward are subject to this measure. For details, please refer to "Overview of special measures in the taxation system" and "List of target types of industry" in "Revival special ward. " (Japanese only)
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Digital Transformation (DX)
| Title | Overview | The Competent Authorities |
|---|---|---|
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The new taxation system for promoting DX investment *Japanese only |
A tax system that allows companies to receive support measures for digital-related investments using cloud technology necessary to realize Digital Transformation (DX) after company wide (not division or office basis) DX plans have been approved by the competent minister. | Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry |
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The 5G Introduction Promotion Tax *Japanese only |
A tax system that aims to propel the expansion of 5G networks by providing tax incentives, such as tax credits according to the amount of the investment or special depreciation of capital investments, for specific national and local 5G capital investments introduced along an approved deployment plan. | IT Industry Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry |
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Innovative ICT（Beyond 5G(6G)）Fund Project *Japanese only |
The main purpose of this program is to strengthen support for research and development aimed at social implementation and overseas deployment, mainly in technological fields in which Japan has strengths. The program will (1) provide focused support for R&D projects in which the implementer has a strategy and determination toward social implementation and overseas deployment, including investment by the project sponsor. Then, the program will be implemented for (2) R&D for the establishment of elemental technologies and the creation of technological seeds which are undertaken from a medium- to long-term perspective and (3) R&D of technologies that contributes to the effective use of radio waves. |
Open Innovation Promotion Headquarters, National Institute of Information and Communications Technology |
Environmental Energy & Carbon Neutral
| Title | Overview | The Competent Authorities |
|---|---|---|
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Green Innovation Fund
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Toward the goal of achieving Carbon Neutrality by 2050, the government has established a 2 trillion yen “Green Innovation Fund” under the FY2020 Tertiary Supplementary Budget and decided to assign the New Energy and Industrial Technology Development Organization (NEDO) to its operation. Among the priority fields for which implementation plans have been formulated within the Green Growth Strategy, where policy effects are significant, and long-term continuous support is required to realize social implementation, the government will provide continuous support to companies and other organizations committed to take on challenges toward achieving specific goals from R&D through demonstration to social implementation for the next 10 years. Summary  (304KB)Green Innovation Fund Project (Japanese only)
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Environmental Policy Division, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry New Energy and Industrial Technology Development Organization (NEDO)
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Tax System(s) to Promote Investment Toward Carbon Neutrality (Special depreciation or tax credits applicable for introduction of production facilities that optimize the production process.) (P36) *Japanese only |
This tax system allows the special measures* of tax credits of up to 10% or special depreciation of 50% for the introduction of (1) production equipment for products with a large decarbonization effect, and (2) equipment that achieves both decarbonization and added value improvement in production processes, etc., based on the plan approval system of the Act on Strengthening Industrial Competitiveness. *The amount of the investment shall be at or less than JPY 50 billion. The deductible tax amount shall be up to 20% of the corporate tax amount in total with the above mentioned DX investment promotion tax system. |
Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry |
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Transition Finance to Promote Efforts Toward the Realization of Carbon Neutrality *Japanese only |
A special measure including a performance-based interest subsidy system for loans to business operators that have formulated a 10-year or more plan to promote steady CO2 reduction efforts (transition) toward the realization of carbon neutrality in 2050 and have been certified by the minister having jurisdiction over the business. | IT Industry Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry |
Open Innovation and R&D
| Title | Overview | The Competent Authorities |
|---|---|---|
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The R&D Tax Credit System *Japanese only |
A tax credit system that allows companies conducting research and development to be deducted 2% to 14% of a company's testing and research expenses from their corporate tax payments. | Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry |
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The Special R&D costs Tax credit scheme *Japanese only |
their corporate tax payments for the relevant fiscal year the amount calculated by multiplying the amount of testing and research expenses spent for joint research or commissioned research with universities, national research institutes, or other companies by a certain deduction rate (20%, 25%, or 30%). The maximum amount of the credit is 10% of the corporate tax amount, which is separate from the amount of credit under the total amount tax credit system. |
| Title | Overview | The Competent Authorities |
|---|---|---|
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Open innovation tax incentive *Japanese only |
A tax credit system that allows a domestic business corporation or its domestic CVC to be deducted 25% of the acquisition price of the shares from the income, if it acquires a certain amount or more of newly issued shares of a startup company, aiming for open innovation with startup companies. In addition, according to the 2023 tax reform, if an M&A (acquisition of a majority of voting rights) that contributes to the growth of a start-up company is conducted on or after April 1, 2023, the acquired issued shares will also be subject to the system. |
Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry Small and Medium Enterprise Agency |
| Tax Deduction System for Research and Development (R&D Tax Credit System) |
(Please refer to “Outline of the R&D Tax Credit System
|
Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau,Ministry of Economy, Trade and Industry
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Promotion of Open Innovation
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Tax credit for the total amount of expenses for joint or contract research with universities, national research institutes, etc. * For joint or contract research with universities and national research institutes, etc.= 30% * For other cases (joint research between companies, etc.) = 20%
*View “Outline of the R&D tax Credit System” under “Tax Deduction System for Research and Development (R&D Tax Credit System) |
Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry
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Highly Needed Medical Devices, etc. and Expanding the Scope of Applicability (1.5MB)
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Initiative to solicit requests for development of drugs and indications that are approved for use in Europe, the United States, etc. but are not approved in Japan and to evaluates the medical necessity of the received requests as well as to encourage pharmaceutical companies to develop the drugs by confirming the validity of the tests required for approval application and the applicability to public knowledge application. Incentives such as subsidies, tax credits, and priority review are available for the development of unapproved drugs and off-label drugs that meet the conditions. |
Research and Development Policy Division, Health Policy Bureau, Pharmaceutical Evaluation Division, Pharmaceutical Safety Bureau, Ministry of Health, Labour and Welfare |
Special Regulatory Measures
| Title | Overview | The Competent Authorities |
|---|---|---|
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Regulatory Sandbox in Japan
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A system to lead to a review of regulations using the information and data obtained by implementing rapid demonstration of innovative technologies and business models such as AI, IoT, blockchain, etc. without being subject to regulations by limiting the period of time and participants, etc. | GoJ's Regulatory Sandbox Team (in liaison with the Cabinet Office), within the Cabinet Secretariat |
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System to Remove the Gray Zone Areas
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A system to ensure that business operators who intend to start new business activities can carry out new business activities with peace of mind even in fields where the scope of application of current regulations is unclear by allowing business operators to check in advance along their specific business plans whether or not the regulations are actually applied. |
Startup and New Business Promotion Office, Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry
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System of Special Arrangements for Corporate Field Tests
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A system that allows business operators to apply special measures for regulations along their specified business plan on a “business unit” basis on the condition that safety, etc. is ensured, if the business operators who intend to conduct new business activities propose special measures for regulations that prevent them from doing their activities. |
Human Resources/Productivity Improvement
Tax incentive for wage and productivity improvement
| Title | Overview | The Competent Authorities |
|---|---|---|
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Enhancement of the tax incentives to encourage wage increases (for large companies) *Japanese only |
A tax credit system that allows companies which actively invest in wage increases and human resource development to be deducted a certain percentage of the increase in employee salaries from the previous fiscal year from the amount of corporate tax or income tax. |
Human Resources Policy Office, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry
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Enhancement of the tax incentives to encourage wage increases (for small and medium-sized enterprises) *Japanese only |
A tax credit system that allows small and medium-sized enterprises, etc. which file a blue tax return to be deducted a portion of the increased amount from their corporate tax (or income tax for sole proprietors) if they are subject to certain requirements and paid more amount of salaries, etc. than those in the previous year. | The Small and Medium Enterprise Agency |
Incentives for Highly Skilled Foreign Professionals from foreign countries: Incentive measures for foreign nationals concerning startups
| Title | Overview | The Competent Authorities |
|---|---|---|
|
Points-based System for Highly Skilled Foreign Professionals” (PBS) *Japanese only |
A system that provides preferential treatment in immigration and residency management for highly-skilled foreign professionals using a point system in order to promote the acceptance of highly-skilled foreign professionals. | Immigration Services Agency of Japan |
| Resident status based on “Foreign Entrepreneurship Activity Promotion Program” for National Strategic Special Zones |
Foreign nationals attempting to start a business in Japan need to obtain a “business manager” visa. (Acquisition requirement: securing of an office and investment of five million yen or more or employment of two or more full-time employees, etc.). Under the special measures of the Immigration Control Law regarding National Strategic Special Zones, even if the above requirements are not fulfilled, applicants can still obtain a status of residence for six months to set up business, under supervision by the implementing organization (local government) of the project |
Headquarters for the Regional Revitalization Cabinet Office, Governments of Japan |
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Resident status (so-called “start-up visa”) based on “Projects for Encouraging Foreign Entrepreneurs to Start Business ”
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Foreign nationals attempting to start business in Japan need to obtain a “business manager” visa. (Acquisition requirement: securing of an office and investment of five million yen or more or employment of two or more full-time employees, etc.). Under the special measures based on the “Public Notice Related to Projects for Encouraging Foreign Entrepreneurs to Start Business ” （in Japanese only）, even if the above requirements are not fulfilled, applicants can still acquire a resident status for up to one year for an preparatory entrepreneurial activities, under the supervision of the implementing organization (local government) of the project.
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Startup and New Business Promotion Office, Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry |
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J-SKIP(Japan System for Special Highly-Skilled Professionals) (225KB)
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A system, separately from the point-based system for "highly-skilled professionals, that grants a status of residence corresponding to "highly-skilled professionals" to individuals with a certain level of educational background, work history and annual income and provides them with more preferential treatment as "special highly skilled professionals" than in the point-based system for "highly-skilled professionals." | Immigration Services Agency of Japan |
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J-Find(Japan System for Future Creation Individual Visa)
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A system in which individuals who have graduated from specific top universities and wish to participate in job hunting, entrepreneurial activity in Japan can be granted a status of residence as “designated activities" ("future creation individual") that allows them to remain in Japan for a maximum of 2 years. |
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