Japan mulls tax breaks for investments into startups

The programme was first introduced in fiscal 2020 as a two-year measure, and is set to expire in March 2022.
By: | August 25, 2021
Topics: Compensation and Benefits | Japan | News | Restructuring

The Japanese government is considering extending tax breaks for companies acquiring equity stakes in startups with cutting-edge technologies and innovative ideas that can be used in growth sectors beyond fiscal 2021. 

The existing tax relief programme allows companies to deduct 25% of the amounts of their share purchases in startup companies for business tie-ups and other purposes from their taxable incomes.

Large companies that buy ¥100 million (US$910,805) or more in startup shares and smaller businesses investing ¥10 million (US$91,080) or more would be eligible for the tax cuts. 

The programme was first introduced in fiscal 2020 as a two-year measure, and is set to expire in March 2022. The extension of the programme is expected to be discussed at the end of this year, as part of the fiscal 2022 tax reform package, writes The Japan Times.

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So far, over 100 tax breaks have been awarded to businesses, according to the Ministry of Economy, Trade and Industry. The ministry is planning to further expand the range of firms eligible for the tax breaks under the extended programme.