Government Incentives

The Government of Japan, relevant ministries and agencies, local governments, and JETRO work together to encourage foreign direct investment in Japan through a wide range of incentive programs.

Japan offers various incentives to promote investment by foreign companies and foreign-affiliated enterprises.

Outlined below are major incentive programs that may be of particular interest to such companies.

(Eligibility requirements, application procedures, and support details vary by program.)

R&D and Innovation
Talent Acquisition and Retention
Establishment of Business Bases and Capital Investment
Environment and Energy
Expansion to Specific Areas

R&D and Innovation

Title	Overview	The Competent Authorities
Act for Promotion of Japan as an Asian Business Center (Act on Special Measures for the Promotion of R&D Business, etc. by Specified Multinational Enterprises)	Purpose: To promote activities to attract global companies' research and development centers and regional headquarters to Japan. Eligible Entities: Specified multinational enterprises planning to establish a domestic affiliate in Japan to conduct new R&D activities or headquarters functions. Key Support Measures: a) Financing support through Small and Medium Business Investment & Consultation Co., Ltd. (corporations with capital exceeding 300 million yen are also applicable) b) Accelerated patent examination procedures (shortened from approx. 22 months to approx. 2 months, based on FY2011 performance) c) Shortened review period for prior notification of inward direct investment in regulated industries (shortened from 30 days to 2 weeks) d) Accelerated screening for Certificates of Eligibility for foreign nationals scheduled to work in Japan (shortened from 1 month to 10 days)	Investment Facilitation Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Innovative ICT Fund Projects for Beyond 5G/6G	Purpose: To strengthen support for research and development projects aimed at social implementation and overseas expansion, focusing on technology fields in which Japan has competitive advantages. Program of Business Strategy Support Type Eligible Projects: Research and development projects involving technologies that fall within the competitive domains of individual companies, etc. and are accompanied by clear strategies and commitments for social implementation and overseas expansion. Support Details: Grants covering up to one half of the total project cost, with the support scale (national expenditure portion) reaching up to several billion yen per year. Program of Common Platform Technology Establishment Type Eligible Projects: Technologies that fall within cross-industry common platform or collaborative domains necessary for the early realization of social implementation and overseas expansion, and in principle, which are explicitly stipulated in official government documents as requiring national implementation, and the development is led by the government. Support Details: Up to several billion yen per year. Program for Elemental Technologies and Seeds Creation Eligible Projects: Research and development projects (including international joint research) aimed at establishing elemental technologies or creating technological seeds that correspond to Technology Readiness Levels (TRL) 1 to 3 at the project start, require a certain period before social implementation, and are undertaken from a medium- to long-term perspective. Support Details: Up to approx. 100 million yen/year (maximum: several hundred million yen). Program for R&D of Effective Utilization of Radio Spectrum Eligible Projects: Research and development related to technologies specified in Article 103-2, paragraph (4), item (iii) of the Radio Act of Japan. Support Details: Comparable support level to other R&D programs, depending on the scale of development.	Open Innovation Promotion Headquarters, National Institute of Information and Communications Technology (NICT)
Tax Incentive for Promoting Open Innovation	New Investment Type Scheme Eligible Entities: Domestic operating companies or their domestic corporate venture capital (CVC) arms. Tax Measures: When acquiring shares of a startup company, 25% of the acquisition cost is deductible from taxable income. Cap: Up to 1.25 billion yen per investment (conversion at acquisition cost: 5 billion yen/project, and 50 billion yen/company per year), up to 12.5 billion yen per eligible corporation per fiscal year (combined with M&A Type Scheme). M&A Type Scheme Eligible Entities: Domestic operating companies or their domestic CVC arms. Tax Measures: When conducting an M&A involving a startup company, 25% of the acquisition cost of the acquired outstanding shares is deductible from taxable income. Cap: Up to 5 billion yen per investment (conversion at acquisition cost: 20 billion yen/project, and 50 billion yen/company per year), up to 12.5 billion yen per eligible corporation per fiscal year (combined with New Investment Type Scheme).	(New Investment Type and M&A Type: For investments from large corporations) Tax Incentive for Promoting Open Innovation Office, Innovation and Environment Policy Bureau, Ministry of Economy, Trade and Industry (METI) (New Investment Type: For investments from SMEs) Office for Startup and New Business Promotion, Business Support Department, Small and Medium Enterprise Agency
R&D Tax Credit System	Purpose: To promote mid- to long-term and innovative research and development that leads to the creation of innovation by maintaining and expanding private-sector R&D investment, thereby strengthening Japan's growth potential and international competitiveness. Eligible Entities: Companies conducting research and development activities. Tax Measures: A tax credit equal to the amount obtained by multiplying eligible R&D expenses by the applicable tax credit rate (1%-14%) may be deducted from the corporate tax liability. Cap: Up to 25% of the corporate tax liability.	Research and Development Division, Innovation and Environment Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Special R&D Costs Tax Credit Scheme	Purpose: To provide significant incentives for collaborations through joint research and commissioned research with universities, national research institutes, and other companies, thereby promoting open innovation. Eligible Activities: Joint research and commissioned research carried out with universities, national research institutes, and other entities. Tax Measures: An amount calculated by multiplying eligible R&D expenses by a specified deduction rate (20%, 25%, or 30%) may be deducted from the corporate tax liability for the relevant fiscal year. Cap: Up to 10% of the corporate tax liability, separate from the general R&D tax credit system limit.	Research and Development Division, Innovation and Environment Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Call for Requests for Unapproved and Off-label Drugs with High Medical Needs	Purpose: To assess the medical necessity of drugs and indications that are approved for use in Europe, the United States, and other regions but have not yet been approved in Japan, and to confirm the appropriateness of the studies required for approval applications and their eligibility for public disclosure applications, thereby facilitating development by pharmaceutical companies. Eligible Items: Unapproved drugs, off-label drugs, and products covered by the Scheme for Rapid Authorization of Unapproved Drugs. Implementation Details: Submitted requests are reviewed for medical necessity by the Evaluation Committee on Unapproved Drugs and Off-label Drugs with High Medical Needs.	Ministry of Health, Labour and Welfare (MHLW) Research and Development Policy Division, Health Policy Bureau Pharmaceutical Evaluation Division, Pharmaceutical Safety and Environmental Health Bureau
Regulatory Sandbox Scheme (Demonstration Scheme for New Technologies)	Purpose: To enable rapid implementation of demonstrations utilizing innovative technologies and business models, such as AI, IoT, and blockchain, without being subject to existing regulations by limiting the duration and participants, and to review and improve regulations based on the information and data obtained through such demonstrations. Eligible Entities: Businesses engaged in innovative business activities. Implementation Details: Demonstrations approved by the relevant regulatory authorities are conducted upon application by businesses, and the information and data obtained through these demonstrations are utilized to support regulatory review and reform.	Japan's Growth Strategy Headquarters, Cabinet Secretariat– Team for Promoting Social Implementation of New Technologies
System to Remove Gray Zone Areas	Purpose: To clarify the applicability of existing regulations to specific business plans, enabling businesses seeking to undertake new business activities to proceed with greater certainty even in areas where the scope of current regulations is unclear. Eligible Entities: Businesses seeking to engage in new business activities. Implementation Details: Businesses may inquire regarding whether existing regulations apply to their planned new business activities.	Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry (METI)
System of Special Arrangements for Corporate Field Tests Special Regulatory Measures for New Business Activities	Purpose: To allow businesses seeking to undertake new business activities to propose special regulatory measures that address regulatory barriers. Subject to conditions such as ensuring safety, special regulatory measures may be approved on a business entity basis, in line with specific business plans. Eligible Entities: Businesses seeking to engage in new business activities. Key Support Measures: Application of special regulatory measures to new business activities proposed by the business.	Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Tax Deductions for Innovation Bases (Innovation Box Tax Regime)	Purpose: To strengthen Japan's competitiveness as a location for research and development activities and to encourage private-sector investment in intangible assets. Eligible Assets: Patent rights or copyrights in AI-related software programs that are acquired or created on or after April 1, 2024, by corporations filing blue tax returns. Tax Measures: A 30% income deduction is applied to income derived from licensing and other uses of eligible patent rights or AI-related software program copyrights.	Research and Development Division, Innovation and Environment Policy Bureau, Ministry of Economy, Trade and Industry (METI)
SBIR (Small/Startup Business Innovation Research) Program	Purpose: To promote research and development by startups and other similar entities, facilitate the smooth social implementation of the outcomes, and thereby stimulate innovation in Japan. Eligible Entities: Small and medium-sized enterprises, researchers, and other entities engaged in innovative R&D and aiming to commercialize the outcomes. Specific New Technology Subsidies, etc. Support Details: Various ministries and agencies provide R&D subsidies and commissioned research funding to R&D-oriented startups and similar entities. Designated Subsidies, etc. Key Support Measures: Among the Specific New Technology Subsidies, the national government designates R&D themes based on policy needs and provides subsidies and other financial support accordingly.	Secretariat for Science, Technology, and Innovation Policy, Cabinet Office

Talent Acquisition and Retention

Title	Overview	The Competent Authorities
Tax Measure to Promote Wage Increases for Medium-Sized Companies	Purpose: To encourage companies to increase employee wages, thereby stimulating consumption and revitalizing the economy. For Medium-Sized Companies Eligible Entities: Corporations and individual business owners filing blue tax returns with 2,000 or fewer employees. Tax Measures: A certain percentage of the increase in total employee wages and salaries from the previous fiscal year may be deducted from the corporate tax liability or income tax liability. Cap: Up to 35% of the total increase in wages and salaries paid to all employees.	Tax Support Center for All Enterprises and Medium-Sized Enterprises
Tax Measure to Promote Wage Increases for Small and Medium-Sized Enterprises	Purpose: To promote wage increases by small and medium-sized enterprises, thereby encouraging consumption and supporting economic growth. Eligible Entities: Small and medium-sized enterprises filing blue tax returns, including corporations with stated capital of 100 million yen or less, cooperatives, and similar entities; or individual business owners with 1,000 or fewer employees. Tax Measures: A certain percentage of the increase in total employee wages and salaries from the previous fiscal year may be deducted from the corporate tax liability or income tax liability. Cap: Up to 45% of the total increase in wages and salaries paid to all employees.	SME Tax Support Center, Small and Medium Enterprise Agency (SMEA)
Points-based System for Highly Skilled Foreign Professionals	Purpose: To promote the acceptance of highly skilled foreign professionals. Eligible Applicants: Foreign nationals engaging in one of the following categories of activities: "Advanced Academic Research Activities," "Advanced Specialized or Technical Activities," or "Advanced Business Management Activities." Key Support Measures: Preferential treatment in immigration and residence management is provided based on a points-based evaluation system.	Immigration Services Agency of Japan
Residential Status under the Project for Encouraging Foreign Entrepreneurs to Start Business (So-called "Startup Visa")	Purpose: To strengthen the international competitiveness of Japanese industries and to establish Japan as a hub for international economic activities. Eligible Applicants: Foreign nationals who intend to start a business in Japan. Key Support Measures: Under special measures based on the "Public Notice Related to Projects for Encouraging Foreign Entrepreneurs to Start Business," eligible applicants may be granted a status of residence allowing them to engage in business startup preparation activities for up to two years, subject to review by the implementing local government. Note: Normally, obtaining the "Business Manager" status of residence requires meeting certain requirements, such as securing a business office, having capital of at least 30 million yen, and employing at least one full-time staff member.	Innovation and Startup Promotion Division, Innovation and Environment Policy Bureau, Ministry of Economy, Trade and Industry (METI)
J-SKIP (Japan System for Highly-Skilled Professionals)	Purpose: To enable swift and reliable acceptance of highly-skilled foreign professionals without requiring a complex point-based evaluation, thereby promoting economic growth and strengthening international competitiveness. Eligible Applicants: Foreign nationals engaging in or intending to engage in Advanced Academic Research Activities or Advanced Specialized/Technical Activities who either: hold a master's degree or higher and have an annual income of 20 million yen or more, or have 10 or more years of professional experience related to the intended activities and an annual income of 20 million yen or more. Foreign nationals engaging in Advanced Business Management Activities who have at least 5 years of professional experience in business management or administration and an annual income of 40 million yen or more. Key Support Measures: Granting of the "Highly Skilled Professional" status of residence and preferential treatment corresponding to this status.	Immigration Services Agency of Japan
J-FIND (Japan System for Future Creation Individual Visa)	Purpose: To attract outstanding overseas students to Japan in order to promote economic growth and enhance international competitiveness. Eligible Applicants: Foreign nationals who graduated from a university in the "List of Universities Eligible for J-Find" or completed a graduate program at such a university, received a degree or professional degree within the past five years, and possess savings equivalent to at least 200,000 yen at the time of application. Key Support Measures: Eligible applicants may be granted the "Designated Activities (Future Creators)" status of residence to conduct job-hunting activities or business startup preparation activities in Japan.	Immigration Services Agency of Japan
Human Resources Acquisition and Retention Support Subsidy	Purpose: To promote the securing and retention of human resources by supporting employers in improving working environments and creating attractive workplaces. Eligibility: Requirements are defined for each of the seven courses, including: Foreign Worker Employment Environment Improvement Support Course Employment Management System/Work Environment Improvement Support Course Small and Medium-sized Enterprise Association Support Course Key Support Measures In addition to subsidies for costs incurred in introducing equipment or implementing projects, subsidy amounts are set for eligible expenses under each of the seven courses. *For details, refer to the official "Human Resources Acquisition and Retention Support Subsidy" website.	Ministry of Health, Labour and Welfare (MHLW)

Establishment of Business Bases and Capital Investment

Title	Overview	The Competent Authorities
Tax Incentives for Strengthening Local Business Facilities (Office Tax Incentives)	Purpose: To promote the establishment, expansion, or relocation of designated business facilities, thereby strengthening business bases in regional areas. When Establishing or Expanding Headquarters Functions in Regional Areas (Including inward FDI) Eligible Assets: Buildings, building fixtures, and structures that qualify as designated business facilities, as well as designated business-associated child welfare facilities developed in conjunction with them. Acquisition Cost Requirement: 45 million yen or more (10 million yen or more for small and medium-sized enterprises) Tax Measures: Special depreciation of 15%, or tax credit of 4% applied to the acquisition cost of eligible buildings and related assets. Applicable Period: Certification by the prefectural governor must be obtained by March 31, 2028. For details, refer to the PDF brochure "Tax Incentives for Strengthening Local Business Facilities" available in the section "About the Tax Incentives for Strengthening Local Business Facilities" on the website shown on the left. When Relocating Headquarters Functions from Tokyo's 23 Wards to Regional Areas Eligible Assets: Buildings, building fixtures, and structures that qualify as designated business facilities, as well as designated business-associated child welfare facilities developed in conjunction with them. Acquisition Cost Requirement: 45 million yen or more (10 million yen or more for small and medium-sized enterprises) Key Support Measures: Special depreciation of 25%, or tax credit of 7% applied to the acquisition cost of eligible buildings and related assets. Applicable Period: Certification by the prefectural governor must be obtained by March 31, 2028. For details, refer to the same brochure noted above.	Office for Promotion of Regional Revitalization, Cabinet Office (Regional Economic and Industrial Policy Division, Regional Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Regional Future Investment Promotion Taxation	Purpose: To promote Regional Economic Driving Projects that create high added value by leveraging regional strengths and exert significant economic effects on the local business. Eligible Investments: Capital investment carried out in accordance with an approved business plan (which must be certified pursuant to Article 25 of the relevant Act). Tax Measures: 1. Machinery, Equipment, and Fixtures: Special depreciation of 35%, or tax credit of 4% *If certain requirements are met: Special depreciation of 50% or tax credit of 6% 2. Buildings, attached facilities, and structures: Special depreciation of 20%, or tax credit of 2% Eligible Limit on Total Acquisition Cost: Up to 8 billion yen Tax Credit Cap: Up to an amount equivalent to 20% of the corporate tax liability for the relevant fiscal year.	Regional Economic and Industrial Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry (METI)
Tax System to Promote Domestic Production in Strategic Fields	Purpose: To promote the establishment and investment of domestic production bases in strategic fields that drive medium- to long-term economic growth—such as GX (Green Transformation), DX (Digital Transformation), and economic security—and to maintain and expand domestic production. Eligible Entities: Businesses with approved business plans in the fields of electric vehicles and related technologies, green steel, green chemicals, sustainable aviation fuel (SAF), or semiconductors (microcontrollers and analog semiconductors). Tax Measures: Tax credits are granted based on the production and sales volume of each eligible product. Applicable Period: Up to 10 years from the date of certification of the business plan, with a carryforward of up to four years (three years for semiconductors). Cap: Up to 40% of the corporate tax liability (up to 20% for semiconductors)	Ministry of Economy, Trade and Industry (METI)

Environment and Energy

Title	Overview	The Competent Authorities
Green Innovation Fund	Purpose: To provide continuous support—from research and development and demonstration through to social implementation—in priority areas of the Green Growth Strategy, with the aim of achieving carbon neutrality by 2050. Eligible Entities: The primary implementing entities are businesses and other organizations that conduct revenue‑generating activities and are capable of carrying out social implementation in priority areas for which action plans have been formulated under the Green Growth Strategy, or in major areas outlined in the Basic Policy for the Realization of GX that indicate future pathways. Key Support Measures: Financial support covering R&D, demonstration, and social implementation. Applicable Period: Up to 10 years. Basic Policy (Outline) Green Innovation Fund Project	Energy and Environment Innovation Strategy Office, GX Group, Ministry of Economy, Trade and Industry (METI) New Energy and Industrial Technology Development Organization (NEDO)
Financial Support for Promoting Transition toward Carbon Neutrality	Purpose: To promote the provision of financing (transition finance) for initiatives that contribute to the transition toward carbon neutrality, including steady low-carbonization efforts (such as energy conservation) in sectors where emissions reduction is particularly difficult, as well as long-term R&D aimed at achieving decarbonization. Eligible Entities: Businesses certified by the competent minister. Key Support Measures: Implementation of a 0.1% interest rate reduction. Cap: Up to 0.2% interest rate reduction, provided that predetermined interim milestones are successfully achieved during the plan period.	Ministry of Economy, Trade and Industry (METI) Industrial Finance Division, Economic and Industrial Policy Bureau Environmental Finance Office, Innovation and Environment Policy Bureau
Economic Security: Support Fund for Ensuring Stable Supply of Specified Critical Materials	Purpose: To ensure the stable supply of critical materials essential to the lives of citizens and economic activities , in accordance with the Economic Security Promotion Act. Eligible Activities: Development of production infrastructure and production technologies carried out in accordance with supply assurance plans certified by the Minister of Economy, Trade and Industry. Key Support Measures: Provision of subsidies.	Ministry of Economy, Trade and Industry (METI) / New Energy and Industrial Technology Development Organization (NEDO)

Expansion to Specific Areas

Title	Overview	The Competent Authorities
National Strategic Special Zones	Purpose: To implement bold regulatory and institutional reforms and to create "the world's most business-friendly environment." Eligible Entities: Local governments, companies, etc. Key Support Measures: Special regulatory measures within the special zones designated by the national government, as well as tax incentives (including corporate tax), fiscal and financial support measures.	Office for Promotion of Regional Revitalization, Cabinet Office
Comprehensive Special Zones(354KB)	Purpose: To enhance the vitality of Japan's economy and society and promote sustainable development through the comprehensive and focused advancement of measures to strengthen the international competitiveness of industries and revitalize regional economies. Support Measures: Special regulatory and institutional measures within the designated zones, as well as tax incentives (including corporate tax), and fiscal and financial support measures.	Office for Promotion of Regional Revitalization, Cabinet Office
Reconstruction Special Zones(132KB)	Purpose: To support the smooth and rapid development of priority regions and the revitalization of a dynamic Japan. Eligible Areas: Designated priority regions. Key Support Measures: Special regulatory measures, as well as fiscal, and financial support measures.	Reconstruction Agency
Special Zones for Financial and Asset Management Businesses	Purpose: To promote the concentration of financial and asset management industries in designated regions by creating attractive business and living environments, and to improve the regional environment for industrial and corporate growth by attracting domestic and international investment capital. Eligible Areas: Sapporo City, Hokkaido; Tokyo Metropolis; Osaka City, Osaka Prefecture; Fukuoka City, Fukuoka Prefecture Key Support Measures: Regulatory relaxation and special measures, as well as financial support measures such as tax incentives and subsidies.	Comprehensive Policy Division, Comprehensive Policy Bureau, Financial Services Agency

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