Tokyo, Aug. 28 (Jiji Press)–Japan’s industry ministry submitted to a working group within the ruling Liberal Democratic Party on Wednesday requests on tax system revisions for fiscal 2020, including for establishing tax breaks for large companies investing in startups.
The ministry hopes that the government and the ruling camp will incorporate its requests, which also include tax breaks for business succession at smaller businesses by third parties other than relatives, in a package of tax system reform proposals for fiscal 2020, which starts in April next year. The package will be drawn up by the end of this year.
By granting tax benefits for startup investments, the ministry aims to promote the so-called open innovation initiatives, in which companies create new businesses by using ideas and technologies from the outside, officials said.
In Europe, the United States and China, some major information-technology firms and other large companies have enjoyed strong earnings from cooperating with startups they invest in. In Japan, however, large companies have only started to assist startups.
The ministry hopes to boost such moves by lowering the tax burden for investments meeting certain conditions by big companies, according to the officials.
With Japan facing the serious issue of successor-lacking owners of smaller companies being forced to close their businesses despite black ink, the ministry requested the creation of a taxation system to promote business successions by third parties.
The ministry also called for a review to the consolidated taxation system, which encourages inter-enterprise cooperation, and an improvement in the convenience of electronic tax declaration and payment procedures.