The Bill on Measures for Asian Business Centers was passed by the Diet on 27 July 2012. This measure is intended to encourage global companies to establish their R&D centers and Asian headquarters in Japan. The legislation grants incentives such as reduced corporate tax, lower patent fees, quicker investment procedures and funding support to global companies. The new incentives are applicable to new R&D and headquarters operations conducted in Japan by global companies that are certified, by the end of March 2014, as conforming to the defined policy.
Tax-related incentives given to certified companies are as follows:
Corporate Income Tax
On corporate income tax an income deduction 20% of income will be available for fiscal years ending within 5 years from the date of certification.
Individual Income Tax
For personal income tax the directors of certified companies will benefit from the deferral of tax on stock option income under a treatment similar to the qualified stock option system which is normally applicable only to Japanese companies. Stock option income will not be taxed at the time of the exercise, but will be taxed as capital gains at the time the share is transferred if certain conditions are met.
