August 12th 2002
Japan's METI seeks 10 pct R&D tax deductible from corporate tax - report
Source:Nikkei
The Ministry of Economy, Trade and Industry wants 10
pct of corporate research and development expenses, and information
technology investment to be deductible from the corporate tax, the Nihon
Keizai
Shimbun reported, citing ministry sources.
The sources said the ministry has compiled the proposal, which would be
equivalent to a 1.07 trln yen tax cut, as part of its request for the next
fiscal year's budget.
METI's package calls for a tax cut of 570 bln yen in corporate R&D
activity and some 500 bln yen in corporate investment in IT-related areas.
The tax relief, which would be in effect for three to four years, comes
with no conditions on the amount of investment or type of industry sector.
The existing tax break aimed at promoting corporate R&D yields no
reductions for companies if their R&D expenses do not increase from
the
previous year.
It is thus unlikely to serve as much of an incentive for companies when
the economy is weak, the newspaper said.
Tax reductions for corporate R&D under the current system are expected
to
total only 32 bln yen in the current fiscal year, a steep drop from 114
bln
yen 10 years ago.
METI wants tax cuts for IT investment to encompass investment in software
development and other IT-related activities.
The ministry expects tax revenue to increase over time as a result of the
invigorating effects the tax cuts have on the economy.
If a tax-revenue rise appears realistic, the ministry wants to request
reducing the corporate tax rate in three to four years, the sources said.
METI also plans to push corporate R&D in four priority areas -- the
environment, IT, as well as bio- and nanotechnologies.
Specifically, it wants to help projects to develop hydrogen storage
tanks, used in fuel cells, as well as next-generation semiconductors and
artificial red-blood corpuscles that can be preserved at room temperature.
