Incentive for European companies
Japan plans on reviving its economy and boosting employment with tax
breaks to attract foreign companies willing to invest in Japan.
“[For]
the first time in the history of Japan, [we propose] to give foreign
companies preferential treatment in terms of corporate tax,” said
Tatsuya Terazawa, director of the industrial policy division of the
Ministry of Economy and Trade, last December during an interview with
the Financial Times.
On Thursday 10th February the Japanese
cabinet approved a further seven percentage point tax break on the
effective corporate tax rate for foreign companies.
To qualify
for these tax breaks, foreign companies will have to fulfill
some conditions, such as: either setting up research and development
facilities in Japan with an annual budget of at least ¥100 million ($1.2
million) or establishing a branch in Japan as their corporate base for
the entire Asian region. They also need to employ 10 or more people in
the first year of operation
A bill would also allow foreign
nationals working for these companies to get approval for their
residence permit in only 10 days instead of the previous full month.
The
Ministry of Economy, Trade and Industry expects this program to create
around 2,000 jobs and bring in several billion yen in tax revenue, as
well as encourage 30 foreign companies to set up bases in Japan during
fiscal 2011.
These special tax breaks, along with a global
corporate tax rate reduction of five percentage points proposed for
fiscal 2011 would bring the corporate tax to a 29% – a figure considered
competitive by Japanese Prime Minister Naoto Kan, but
still higher than South Korea’s 24% or Singapore’s 17%.