Ministry of Finance Implements Comprehensive Corporate Tax Reform to Stimulate Innovation Investment

The Ministry of Finance announced sweeping corporate tax reforms designed to incentivize research and development investment and support economic growth. The new framework reduces corporate tax rates from 29.74% to 25.5% for companies investing over 3% of revenue in R&D activities. Additional deductions up to 40% apply for investments in artificial intelligence, quantum computing, and green technology development. The reform introduces accelerated depreciation schedules for advanced manufacturing equipment and digital infrastructure. Start-ups receive extended loss carry-forward periods from 10 to 15 years, supporting long-term innovation projects. Foreign companies establishing R&D centers in Japan qualify for reduced rates during initial five years of operation. The ministry projects the reforms will generate 2.5 trillion yen in additional private R&D investment over five years. Anti-abuse measures prevent profit shifting while maintaining competitiveness with regional tax regimes. Small and medium enterprises receive simplified compliance procedures and enhanced deduction rates. Revenue neutrality achieved through minimum tax provisions for large corporations and digital services taxation. Implementation begins April 2025 with transitional measures for existing tax planning structures.