Japan Eyeing Tax Cut to Promote R&D on Advanced Technologies

Tokyo, Dec. 11 (Jiji Press)–Japan’s government and ruling parties are in the final stages of discussions on introducing a new tax relief system to promote companies’ research and development activities for cutting-edge technologies, it was learned Thursday. The aim is to foster advanced technologies, whose commercialization is uncertain at the research stage, amid intensifying international competition. The government and the coalition of the ruling Liberal Democratic Party and its partner, the Japan Innovation Party, also known as Nippon Ishin no Kai, plan to include this initiative in the fiscal 2026 tax system reform package, to be compiled by year-end. The new program will cover six fields designated by the government as important national strategic technologies from the perspective of economic security. The six fields are artificial intelligence and advanced robots, quantum technology, semiconductors and communications, biotechnology, nuclear fusion, and space, informed sources said. Under the program, companies will be allowed to deduct 40 pct of R&D costs for research projects certified by the government from their corporate tax payments, the sources said. The cap on the deductions will be set at a level equivalent to 10 pct of the corporate tax amount. The deduction rate will be 50 pct for joint research with certified institutions, such as universities, according to the sources. END [Copyright The Jiji Press, Ltd.]