Japan Encouragement LawsThe eighties were quite difficult for foreign investors, mainly because of the high labor costs, the inflated price of real estate and legal registration that made life galling for foreign investors.
At present, since the beginning of the millenium, the situation has improved, real estate prices have skydived and labor costs are more moderate.
In particular, a change in the legal situation allows the introduction of foreign capital without administrative delays.
An example is the regulation that opened up the telecommunications market that had been exclusive to Japanese companies, such as NTT and KDD, to foreign investors.
There is a desire at present to cooperate with foreign investors on many topics such as communications, hi-tech, advanced medical services, products that make a contribution to the environment, the financial market and more.
The Japanese market is attractive to foreign investors at the moment for the following reasons, among others:
- The size of the Japanese market - over 127 million consumers.
- The particularly high technological and economic standard, that is expressed in the high Japanese GDP.
- A high degree of control over the Asiatic market - Japanese productivity constitutes 75% of the entire Asiatic market.
- Substantial rates of saving - the high rate of saving in Japan is reflected in the financial assets held by the public that enable the consumer to purchase goods he finds attractive, even if they are comparatively expensive.
Assistance to Foreign InvestorsForeign investors may obtain assistance from Jetro to promote their investment in Japan.
JETRO Services (JAPANESE EXTERNAL TRADE ORGANIZATION)JETRO promotes foreign investments in Japan through several existing departments of the organization.
Among others, the following services are provided:
- Organization of tour groups - JETRO organizes groups of foreign investors who are taken on organized tours in the different regions of Japan, and which include meetings with Japanese businessmen.
- Assistance for the individual investor - meetings are arranged for a foreign company having an investment potential with possible Japanese businesses. The assistance includes meetings with Japanese CPA's and lawyers who specialize in international investments and taxation.
- Trade fairs - JETRO organizes business fairs in the United States and Western Europe to promote investments in Japan.
- Publications in English - JETRO publishes excellent business guides for potential investors.
Japan Ivestment IncentivesJapan Investment Promotion
SME's companies investing in manufacturing can get 30% depreciation rate, or tax credit of 7%, up to 20% of the corporate tax liabilty, for purchase of certain machinery and equipment.
Japan Capital Investment Benefit
SME companies investing in machinery defined as energy saving get 30% depreciation rate, or 7% tax credit, up to 20% of the corporate tax liability.
Japan Staff Training Incentives
When there is an increase in staff training expenses, compared to the previous average, the company is entitled to get the smaller of a tax credit, 25% of the additional expense, or 10% of the corporate tax.
Japan R & D Expenses
Companies with high R&D expenses compared to the previous 3 years average are entitled to a tax credit of up to 20% of the corporate tax.
Japan Faz - (FOREIGN ACCESS ZONES)The Japanese Government has set up 22 zones, mainly in areas around ports or airports, areas that are defined as FAZ (foreign access zones) with the aim of promoting import businesses in order to attract foreign capital into Japan.
Japanese and foreign companies in these areas are eligible for tax and financing benefits, while foreign companies are eligible, in addition, for advisory services and rented premises.
The companies are eligible for benefits that include, among others, the following:
- Loans at reduced interest.
- Exemption from local taxes - real estate purchase tax and property taxes.
- Increased rates of depreciation.
- Guarantees from Government funds.