Asia Society Policy Institute

TAX INCENTIVES

• On December 10, 2020, Japan's leading parties released their proposals for the 2021 Tax Reform Bill, which contain plans for (1) economic revitalization with/post-COVID, (2) forging a digital society, and (3) de-carbonization of society." Specific measures include tax credits for companies developing a "connectable digital environment,” raising the upper limit of tax credits for companies that increase research and development (R&D) investment, and widening the scope of R&D activities subject to tax credits.

SUBSIDIES

• On July 2, 2021, the Ministry of Economy, Trade, and Industry announced that 151 applicants have been selected for its 2021 Program for Promoting Investment in Japan to Strengthen Supply Chains. According to the application guidelines released by the government, the program aims to “enhance viability of industries by strengthening supply chain resilience” through the subsidization of equipment and facility costs of certain companies. 

• On November 20, 2020, the Ministry of Economy, Trade, and Industry announced that 146 applicants have been selected for its 2020 Program for Promoting Investment in Japan to Strengthen Supply Chains.

• On April 7, 2020, the Japanese Ministry of Finance released a Supplementary Budget for FY2020, in which ¥220 billion (US$2 billion) was allocated to companies reshoring supply chains back to Japan and another ¥23.5 billion (US$214 million) for companies looking to move production to other countries in Southeast Asia. 

• In January 2020, a Ministry of Economy, Trade, and Industry official who oversees Japan’s “China exit” repatriation subsidy program –– which subsidizes the facility, equipment, and moving costs of more than 200 Japanese companies looking to relocate operations back to Japan from abroad –– told Nikkei Asia that "a third round [of subsidies] is included in the next annual budget [FY 2021]."

ADMINISTRATIVE BARRIERS

• On June 15, 2020, Japan External Trade Organization (JETRO) established the COVID-19 Helpline, a 24/7 consultative service for foreign companies and foreign-affiliated companies operating in Japan to provide support for their domestic operations. The service is available in three languages - Japanese, English, and Chinese. 

SPECIAL ECONOMIC ZONES

• On May 27, 2020, the Japanese Diet enacted Act No. 34 of 2020, or the Bill for the Amendment of the National Strategic Special Zones Law. Also known as the Super City Bill, it amends a 2013 bill on strategic special zones by making significant changes to regulatory measures. The bill aims to develop smart cities that utilize artificial intelligence, big data and other cutting-edge technologies to address social policy challenges including a rapidly aging population.

OTHER

• On March 15, 2022, the Trade Ministers of Australia, India, and Japan held the second meeting of the Supply Chain Resilience Initiative (SCRI). The ministers resolved to identify key sectors for future trilateral cooperation and to develop supply chain principles for the region. The SCRI was launched on April 27, 2021, to share best practices on supply chain resilience and hold “investment promotion events and buyer-seller matching events to provide opportunities for stakeholders to explore the possibility of diversification of their supply chains.” The Ministers agreed to hold SCRI meetings once per year, with one country acting as chair each year in the order of Japan, Australia, and India. 

• On June 18, 2021, the Cabinet Office formulated “The Startup City Acceleration Project 2021” and appointed the Kyoto-Osaka-Kobe Bay area as its global hub city. The project’s aim is to accelerate the global development of startups in the region by having “prefectures and cities join forces to attract outstanding international companies” in fields such as smart cities and healthcare. 
   
• On March 5, 2021, the Ministry of Economy, Trade and Industry (METI) and the Japan External Trade Organization (JETRO) selected Higashihiroshima City as a municipality to benefit from the Support Program for Regional Foreign Direct Investment in Japan. The program will help the municipality attract overseas companies, particularly R&D-based companies, including those in the bio-technology sector. 

SUBSIDIES

• On March 1, 2022, the Cabinet brought into effect the Act of Partial Revision of the Act on Promotion of Developing/Supplying and Introducing Systems Making Use of Specified Advanced Information Communication Technologies and the Act on the New Energy and Industrial Technology Development Organization. Under these acts, a fund will be established to provide subsidies for companies to develop production facilities for semiconductors and semiconductor components.

• [Possible New Policy/Program] On October 19, 2021, according to Nikkei, the Japanese government is expected to introduce a ¥100 billion (US$ 880.5 million) fund for research and development of emerging high-technologies such as artificial intelligence, robotics, and big data. The fund for both companies and universities will likely be “co-administered by the Cabinet Office, Ministry of Economy, Trade, and Industry, the Ministry of Education, Culture, Sports, Science and Technology, and the National Security Secretariat.”

TAX INCENTIVES

• On March 27, 2020, the Japanese Diet passed a 2020 Tax Reform Bill that closely follows a tax reform outline announced by Japan's leading parties in December 2019. Among the reforms are "measures on open-innovation activities" –– more specifically a "corporate income deduction equivalent to 25% of investment in certain startups by business firms” to promote business innovation –– as well as "tax measures to promote 5G-related equipment installation."

OTHER

• On August 3, 2021, the Ministry of Economy, Trade and Industry (METI) announced that the Japan External Trade Organization selected 17 companies from ASEAN and 8 from India for its FY 2020 Tertiary Supplementary Budget’s Asia Digital Transformation Promotion Project. This initiative will allow these foreign companies to conduct pilot projects with Japanese companies aimed at promoting business-based digital transformation and accelerating economic growth. 
   
• On June 4, 2021, the Japanese Ministry of Economy, Trade and Industry (METI) announced a Semiconductor Digital Industry Strategy supporting the establishment of manufacturing bases in Japan including through joint ventures with overseas chip foundries. The strategy seeks to drive growth in the nation’s chip manufacturing capacity as a “national project”. This includes drawing from the ¥200 billion (US$1.8 billion) domestic chip-making fund and ¥2 trillion (US$18.2 billion) green innovation fund, as well as utilizing special industrial policies to promote development of a digital industrial infrastructure ecosystem.

TAX INCENTIVES

• On December 10, 2020, Japan's leading parties released their proposals for the 2021 Annual Tax Reform Bill, containing plans for (1) economic revitalization with/post-COVID, (2) forging a digital society, and (3) de-carbonization of society. Measures specific to the financial services sector include the inclusion of "performance-based compensation" as a deductible expense, changes to the inheritance tax, and changes to the "carried interest" tax.

SUBSIDIES

• On December 4, 2020, the Tokyo Metropolitan Government (TMG) announced the launch of its Project for Temporary Office Allocation for Foreign Financial Companies and Human Resources, which provides subsidies for foreign financial companies and employees looking to move to Tokyo from other Asian countries. More specifically, TMG will subsidize office space costs for companies or employees temporarily staying in Tokyo while they conduct preliminary surveys of the city.

ADMINISTRATIVE BARRIERS

• On April 4, 2022, the Japan Exchange Group launched a new market structure for the Tokyo Stock Exchange. The restructuring created three new market segments: Prime Market, Standard Market, and Growth Market. The move seeks to attract global investors with clearer market and issuer expectations and greater transparency. 

• In November 2021, the Financial Services Agency (FSA) adopted two licensing exemptions aimed at helping foreign asset managers open offices in Japan. The policy change is part of Japan’s “International Financial City Initiative,” a suite of tax, regulatory, and information-sharing proposals to attract foreign talent, corporations, and funds to Japan. 

• On January 12, 2021, the Financial Services Agency (FSA) and Local Finance Bureaus (LFB) established a Financial Market Entry Office in an effort to “expand Japan’s role as an international financial center” and “to create an environment that attracts foreign businesses and high-skilled foreign professionals.” The new office will handle all parts of the regulatory process, including “pre-application consultation, registration, supervision after the registration, for newly entering asset management firms.” The office will serve as a single point of contact with support available in English. 

OTHER

• On November 30, 2020, the Tokyo Metropolitan Government announced the launch of its Global Financial City: Tokyo Vision, which aims to support foreign startup companies in the Fintech industry. The program provides foreign startups “with mentoring from leading companies in Japan, as well as business matching with companies in Tokyo."