Japanese Government to Incentivize Strategically Important Corporations by Offering Tax Breaks

A Japanese government panel will consider whether to give tax breaks to companies that invest in areas deemed strategically important in the coming months, a change similar in intent to the US Inflation Reduction Act.

The proposed scheme would make it more appealing for companies to make large-scale investments in Japan by providing tax breaks for long-term projects with high startup and operating costs.

The panel has been tasked with devising a "new form of capitalism," as Prime Minister Fumio Kishida has described it.

According to a government official, tax breaks could be applied to investments in areas such as batteries, electric vehicles, and semiconductor chips, and the scheme could be in place for about ten years.

According to the official, Japan's ruling coalition would have the final say on whether any measures were included in the annual tax reform bill for this year.

The panel, led by Kishida, is made up of cabinet ministers and 16 private-sector representatives, including academics and representatives from business lobbies, labour organisations, and private companies.

It has proposed a variety of policies over the years, including plans to develop the startup market and expand a stock investment programme.