Incentive Programs

To facilitate investment in Japan, the government offers appealing incentives, as well as operating single contact points in relevant ministries and agencies for inquires/support regarding doing business in Japan. Local governments also offer various incentives and support exclusively for foreign-affiliated companies and foreign companies that are planning to open an office in their region.

Incentives for enterprises that foreign-affiliated companies can also use

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.

  1. Headquarters functions indicate an "office," "laboratory" or “training institute."

Prerequisites for qualifying for tax breaks

  1. 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.

  2. 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.

  1. 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External site: a new window will open” (tax system for promoting employment).
*Japanese only

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External site: a new window will open” (tax system for promoting employment).
*Japanese only

Office for Promotion of Overcoming Population Decline and Vitalizing Local Economy in Japan, Cabinet OfficeExternal site: a new window will open (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External site: a new window will open ” (tax incentives for strengthening local business facilities).
*Japanese only

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External site: a new window will open ” (tax incentives for strengthening local business facilities).
*Japanese only

Office for Promotion of Overcoming Population Decline and Vitalizing Local Economy in Japan, Cabinet OfficeExternal site: a new window will open (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
National Strategic Special ZoneExternal site: a new window will open.
*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 JapanExternal site: a new window will open.
*Japanese only
Comprehensive Special ZonesExternal site: a new window will open.
*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 JapanExternal site: a new window will open.
*Japanese only
Special Zones for ReconstructionExternal site: a new window will open. Special measures such as deregulation, tax incentives, etc. are available for companies with business plans in disaster afflicted areas. Reconstruction AgencyExternal site: a new window will open.

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 investmentExternal site: a new window will open.
(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:

  1. Machinery, appliances and fixtures: 40% special depreciation, 4% tax deduction (When certain requirements are met, 50% special depreciation, 5% tax deduction)
  2. Buildings, attached facilities and structures of specific business facilities: 20% special depreciation, 2% tax deduction

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 Subsidized Projects Eligible Costs Subsidy Rates/
Maximum Amount
The Competent Authorities

Subsidy Program for New Business Establishment in the Areas Recovering from Tsunami and Nuclear Disaster towards Employment Creation [ Manufacturing business site location support project ]

A subsidy program for establishment of new factories (manufacturing), distribution facilities, research laboratories, call centers, data centers and others, so as to activate the regional economy through employment creation in the areas within prefectures inundated by the tsunami and Tohoku Earthquake and the areas in Fukushima prefecture affected by the nuclear power station accident and where the evacuation order has been lifted. Initial expenditure for factory/facility location covering from acquisition of land to construction of buildings and installation of production equipment Subsidy rates/amount varies depending on areas eligible and size of company. Up to 1/3 for large companies, 1/2 for SMEs
[Maximum subsidy: 3 billion yen] * 5 billion yen for projects which are particularly highly
valued by a third-party committee in municipalities affected by the tsunami
Regional Industrial Infrastructure Division, Regional Economic and Industrial Policy Group, Ministry of Economy, Trade and IndustryExternal site: a new window will open.
*Japanese
Subsidy Program for Industrial Location and Job Creation to Support Independence and a Return to Recovering Areas (A project supporting the location of business sites for the manufacturing and service sectors) This subsidy program aims to support companies that establish or expand factories to secure a “work place” and to promote industrial accumulation in areas of Fukushima Prefecture which had previously been under evacuation orders. The program is also intended to support commercial recovery to promote the return of residents and the establishment of industries. Land acquisition cost, Land development cost, Building acquisition cost, Equipment cost Subsidy rates/amount varies depending on areas eligible and size of company. Up to 2/3 for large companies, 3/4 for SMEs (Maximum subsidy: 3 billion yen. However, the upper limit shall be yen 5 billion for projects which are particularly highly valued by a third-party committee.) Regional Industrial Infrastructure Division, Regional Economic and Industrial Policy Group, Ministry of Economy, Trade and IndustryExternal site: a new window will open.
*Japanese only
Subsidy for Business Location for Reconstruction of Industry in FukushimaExternal site: a new window will open.
*Japanese only
Provide subsidy for location of factory (manufacturing sector), distribution facility, R&D facility, call center and others to create expansion of production capacity and sustainable creation of employment in Fukushima prefecture suffered damage in wide areas hit by Great East Japan Earthquake and Nuclear Disaster. Initial cost of installing machinery and equipment (excluding renewal and replacement) Rate of subsidy depends on the place of investment and the size of the enterprise making investment. Subsidy equivalent to 1/3 or less than the amount of investment is offered for big businesses, 1/2 for SMEs. [Maximum subsidy: 1billion yen] *In case the governor issues special permission, cap is raised to 3 billion yen. Fukushima Reconstruction Promotion Group, Ministry of Economy, Trade and IndustryExternal site: a new window will open.
*Japanese only

Firm location section, Commercial and industrial Labor Relations Division, Fukushima PrefectureExternal site: a new window will open.

Subsidies for Employment toward Reconstruction of Industry in FukushimaExternal site: a new window will open. *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 External site: a new window will open.
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.

Preferential tax treatment for special zone

Title Overview

Special Zone for Promoting Investment in Reconstruction of Industry in Fukushima External site: a new window will open.

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.External site: a new window will open." (Japanese only)

Industry

Incentives based on Industrial Competitiveness Enhancement Act

Title Overview The Competent Authorities
System to Remove the Gray Zone AreasExternal site: a new window will open.
*View "Industrial Competitiveness Enhancement Act (2014 May Issue) Page 8"
As for new business fields, it is often unclear for enterprises whether the existing laws and regulations will be applied to their new businesses. On such occasions, a system to remove gray zone areas will be useful. In this system, the competent ministry for the business confirms whether the matter is regulated or not to the competent ministry of the regulation on behalf of the company. The period from application to response is within one month in general. Startup and New Business Promotion Office, Industry Creation Policy Division, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and IndustryExternal site: a new window will open.
System of Special Arrangements for Corporate Field Tests External site: a new window will open.
*View "Industrial Competitiveness Enhancement Act (2014 May Issue) Page 9"
Preferential regulatory flexibility to individual enterprises will be allowed as a special provision.
What is different from conventional deregulation is that special arrangements can be applied to individual companies if safety and other requirements are satisfied.

Research and Development

Tax incentives for Research and Development (R&D Tax Credit System)

Title Overview The Competent Authorities
Tax Deduction System for Research and Development (R&D Tax Credit System)
  • Tax incentives through which a certain rate of R&D expenses conducted by private companies as part of their business activities can be deducted from their corporate tax (national tax) of the relevant fiscal year.

(Please refer to “Outline of the R&D Tax Credit SystemExternal site: a new window will open.”)

  • The total expenditure-based tax credit system (the current tax credit rate: 6-14% in principle; 12-17% for SMEs.
  • The application period of the high-level type tax credit system is extended until the end of FY2018.
Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau,Ministry of Economy, Trade and Industry External site: a new window will open.
Promotion of Open InnovationExternal site: a new window will open.

Tax credit for the total amount of expenses for joint or contract research with universities, national research institutes, etc.
Tax credit = total amount of special R&D expenses times 20% or 30%.

* 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)External site: a new window will open.

Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry External site: a new window will open.

Productivity improvement

Incentives based on the Act on Special Measures for Productivity Improvement

Title Overview The Competent Authorities
Regulatory Sandbox in JapanExternal site: a new window will open. The Regulatory Sandbox framework in Japan enables speedy verification and data collection that can lead to regulatory reforms through establishment of an environment where new technologies and business models can be demonstrated, under certain conditions, such as limited participants or duration, without adhering to existing regulations. GoJ's Regulatory Sandbox Team (in liaison with the Cabinet Office), within the Japan Economic Revitalization Bureau of the Cabinet SecretariatExternal site: a new window will open.
Connected Industries Tax systemExternal site: a new window will open. (IoT Tax system)
* Japanese only

Tax measures supporting introduction of systems, sensors, robots and so on necessary in efforts to boost productivity, through collaboration and utilization of data, and for which certain cybersecurity measures are taken

Target equipment: Software, apparatuses, equipment, machinery and devices

Tax measures: 30% special depreciation or 3% tax deduction. The tax credit rate is 5% in the case of a wage increases in which the rate of increased pay and allowance for employees is over 3% from the previous year.

IT Innovation Division,  Commerce and Information Policy Bureau, Ministry of Economy, Trade and IndustryExternal site: a new window will open.
* Japanese only

Tax incentive for wage and productivity improvement

Title Overview Subsidy Rates/ Maximum Amount The Competent Authorities
Tax deduction system for wage and productivity improvementExternal site: a new window will open. (for large companies)
*Japanese only
Tax incentives through which a part of an increase in pay and allowance by large companies raised wages can be deducted from their corporate tax (national tax) of the relevant fiscal year.
Applies to the fiscal years which start from April 1, 2018 to March 31, 2021.

Condition: Pay and allowance (including for workers employed for a continuous period) increases by 3% or more from the previous fiscal year, and domestic capital investment equals at least 90% of total depreciation for the relevant term.

Tax measures: Deduction of 15% of the amount of the increase in pay and allowance from the previous fiscal year. If the cost of education and training increases by 20% or more from the average of the past two years, deduction of 20% (an addition of 5% to the deduction rate) of the amount of the increase in pay and allowance from the previous fiscal year.

Maximum amount of tax deduction:20% of the amount of corporation tax

Human Resources Policy Office, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry External site: a new window will open.
*Japanese only

Foreign Professionals

Incentives for Highly Skilled Foreign Professionals from foreign countries: Incentive measures for foreign nationals concerning startups

Title Overview Incentives The Competent Authorities
Points-based preferential immigration treatment for highly skilled foreign professionalsExternal site: a new window will open. Under the points-based system, foreign professionals who earn 70 points or more will be recognized as "highly skilled foreign professionals" and will be given preferential immigration treatment.
Japanese Green Card for Highly Skilled Foreign Professionals.
Foreign nationals are allowed to apply to the permission of permanent residence only after one-year residence in Japan if their score is 80 points or more in the point-based system for highly-skilled foreign professionals, or after three-year residence in Japan if their sore is 70 points or more. Foreign Residents Information Center, Immigration Bureau, Ministry of JusticeExternal site: a new window will open.
Resident status (so-called “start-up visa”) based on “Programs to Promote the Acceptance of Foreign Entrepreneurs” 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
Procedures: Foreign entrepreneurs are required to submit a founding activity plan etc. to the implementing organization (local government) of the project and obtain confirmation.
Target area: Special zones implementing the program.
Implementing body:
Tokyo Metropolitan GovernmentExternal site: a new window will open , Fukuoka CityExternal site: a new window will open , Niigata CityExternal site: a new window will open , Imabari CityExternal site: a new window will open (in Japanese only), Sendai CityExternal site: a new window will open , Hiroshima PrefectureExternal site: a new window will open , Aichi PrefectureExternal site: a new window will open
Resident status: “business manager”visa (startup activities)
Period of stay: Six months (To stay after this period, applicants must obtain the “business manager” visa status of residence after fulfilling the requirements.)
Headquarters for the Regional Revitalization Cabinet Office, Governments of Japan
Resident status (so-called “start-up visa”) based on “Projects for Encouraging Foreign Entrepreneurs to Start BusinessExternal site: a new window will open 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 BusinessExternal site: a new window will open” (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.

Procedures: Foreign entrepreneurs are required to submit an activity plan of preparatory entrepreneurial activities to the implementing organization (local government) of the project and obtain approval.
Target area: local government implementing projects
Implementing body:
Fukuoka CityExternal site: a new window will open , Aichi PrefectureExternal site: a new window will open (Japanese), Gifu PrefectureExternal site: a new window will open, Kobe CityExternal site: a new window will open(Japanese) , Osaka CityExternal site: a new window will open(Japanese), Ibaraki Prefecture(Japanese)PDF file (External site: a new window will open)(342KB) , HokkaidoExternal site: a new window will open , Mie Prefecture (Japanese)External site: a new window will open(Japanese) , kyoto Prefecture (Japanese)External site: a new window will open(Japanese) , Oita Prefecture (Japanese)External site: a new window will open(Japanese)


Resident status: “Special activity” visa
Period of stay: Up to one year (To stay after this period, applicants must obtain the “business manager”visa status of residence after fulfilling the requirements.)

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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