Incentive Programs
Foreign Direct Investment in Japan
Title | Overview | The Competent Authorities |
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Act for Promotion of Japan as an Asian Business Center |
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 |
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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 system for promoting employment). |
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” (tax system for promoting employment). |
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 ” (tax incentives for strengthening local business facilities). |
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 ” (tax incentives for strengthening local business facilities). |
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 |
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 |
Special Zones for Reconstruction | Special measures such as deregulation, tax incentives, etc. are available for companies with business plans in disaster afflicted areas. | Reconstruction Agency |
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 |
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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 |
Subsidy for Business Location to Support Self-Reliance and Return, and Create Employment |
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 |
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 | 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 |
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. |