English

Japan grants investment incentives without evaluating them

Japan provides several inventives to attract investment without evaluating its results, according to a report by the World Trade Organization (WTO).

Pursuant to the Japan Promotion of Business Activity in Asia Act of 2012, incentives are provided to encourage investment in the establishment of research and development centers and regional headquarters.

The Special Fiscal Measures Law provides for the granting of tax credits in relation to the income tax of natural persons.

There are other investment incentives, such as: aid for the collection by Small and Medium Business Investment and Consultation Co. Ltd. of funds destined for SMEs (including companies with a minimum capital of JPY 300 million); accelerated patent exams; shortened investment procedures; and expedited resident status examinations.

As the authorities have indicated, no evaluation of the efficiency of these incentive programs has been carried out.

Investment, other strategies

Invest Japan, under the Office of the Council of Ministers, is responsible for providing investment information and related matters and handling investment-related claims. It groups the contact points of various ministries, public organizations and local administrations.

It has three main committees: the Council for the Promotion of Foreign Direct Investment, responsible for attracting new investment projects and coordinating with foreign companies the reforms necessary to promote FDI52; the Special Group for the Promotion of Foreign Direct Investment in Japan, which administers the Investment Advisers Assignment System; and the Working Group for the Review of Regulations and Administrative Procedures, responsible for simplifying the regulations and administrative procedures associated with FDI in Japan, as well as coordinating the Ministries and competent bodies.

The Investment Advisors Assignment System has been in operation since 2016; it establishes the framework and the conditions under which the designated ministers of state can advise companies that have made significant investments in Japan from abroad.

Legal framework

Various laws and regulations govern investments in Japan: the Foreign Exchange and Trade Law (FEFTA) and its implementing regulations (the Order of the Council of Ministers on Direct Investments in the Country; the Order on Direct Investments in the Country; and the Order of Changes); and the Promotion of Japan as a Center for Business Activity in Asia Act of 2012.

Investment

In 2017, the FEFTA was amended, with the aim, among other things, to extend the scope of prior control of transfers of unlisted shares between foreign investors, and to prescribe that foreign investors invest in Japan without being registered in the registration could be subject to executive orders, including orders to sell its capital stock; Those measures were taken to protect Japan’s essential security interests.

Since 2017, no new amendments have been made to this Law.

 

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