EXCLUSIVE: Japan to Extend Tax Cuts for Firms Moving Out of Tokyo

Tokyo, Dec. 18 (Jiji Press)–Japan’s government and ruling bloc plan to extend a corporate tax break program for companies relocating their headquarters functions from Tokyo’s 23 special wards to regional areas for two years until the end of March 2028, Jiji Press learned Thursday. Companies buying existing office buildings in regional areas will newly become eligible for the tax breaks, informed sources said. The two-year extension of the program, aimed at encouraging companies to move out of the Japanese capital and creating new jobs in the countryside, will be included in the fiscal 2026 tax system reform package, to be compiled by the end of this month. Under the program, companies that relocate their head office functions from the 23 wards of Tokyo to regional areas by buying office buildings can deduct an amount equivalent to 7 pct of the purchase prices from their corporate tax payments. The deduction rate is 4 pct for companies expanding their existing headquarters functions outside Tokyo. For purchases of existing office buildings, companies transferring and those expanding their head office functions will be allowed to subtract 4 pct and 2 pct of the purchase prices, respectively, from their corporate taxes, the sources said. The deduction rate will be raised by 1 percentage point for companies relocating or expanding their headquarters through the construction of new office buildings, which is effective in creating new jobs, according to the sources. To address accelerating overconcentration in Tokyo, the government compiled in June the Regional Revitalization 2.0 initiative, which includes a target of creating some 10,000 jobs in regional areas over the three years through fiscal 2027, mainly by encouraging companies to relocate their headquarters functions from the country’s capital. END [Copyright The Jiji Press, Ltd.]