Introduces tax incentives for capital and R&D investment
31 Mar 2026
On 31 March 2026, Japan adopted the 2026 Tax Reform, introducing new tax incentives for capital investment and research and development (R&D). The tax reform includes the following measures:
- Introducing a tax incentive for large-scale and high value-added capital investment, including immediate depreciation and 7 per cent tax credit (4 per cent for buildings), covering all industries;
- Allowing unused tax credits under the capital investment incentive to be carried forward for up to three years where companies obtain approval for plans responding to rapid and unforeseeable changes in international economic conditions; and
-
Introducing a new strategic technology category under the research and development tax credit system, providing a tax credit of 40 per cent of qualifying R&D expenditure, rising to 50 per cent for qualifying joint or commissioned research with certified research institutions, including in strategic technology fields such as artificial intelligence, quantum technology and semiconductors.
The reform entered into force on 1 April 2026.
Nature of measure:
Type:
-
Promotion and facilitation (Investment incentives)
Industry:
-
Not industry specific
-
Services (Scientific research and development)
Inward FDI:
Yes
Outward FDI:
No
Sources:
