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Tax credit for research and Development |
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In an attempt to entice companies to increase the R&D expenditures and provide more incentive to companies with high rates of R&D costs, such companies will be given an additional tax credit (the excess R&D costs over 10% of the average annual sales amount). As a result, the maximum rate of tax credit will be increased to 30%. This amendment will be effective for fiscal years beginning between April 1, 2008 and March 31, 2010. |
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Basic |
Additional credit'select one |
| Method |
System |
Credit |
Change |
Excess |
| Tax credit |
Basic tax credit |
Gross R&D costs X tax credit ratio(A) (A）= smaller of
(8%+R&D costs ratio X0.2) or 10% |
Special tax credit for increased R&D costs [Tax credit]
(R&D costs - annual average R&D）x 5% |
Tax credit for excess of R&D costs over 10% of sales amount [Tax credit] (R&D costs - average sales amount x 10%）x ((R&D costs ratio - 10%) x 20%) |
| Joint R&D with the official institutions |
Special R&D costs X (12% - above(A)) |
| Special credit for small & medium sized companies |
R&D
costs X 12% |
| Limit of credit |
20% |
Additional 10% |
Additional 10% |
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Information Infrastructure Tax Credits |
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The information infrastructure tax law was introduced to allow companies to facilitate investment in information security. 35% of the acquisition price can be treated as special depreciation or 7% investment tax credit can be applied. This law only applies to those companies under blue form status.
The applicable period will be extended for two additional years and will also include the following amendments: |
| 1a |
Software linking information systems between divisions and companies will be added as a qualified facility [e.g. ESB (Enterprise Service Bus)] |
| 1b |
Entities providing SaaS（Software as a Service), ASP (Application Service Provider) will be added as qualified enterprises. |
| 2a |
The minimum total acquisition amounts for information infrastructure expenditures have been reduced. |
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Prior to amendment |
Amended (Fiscal years starting from April 1, 2008) |
| Corporations with capital of 100 million yen or less and individuals |
3 million yen |
700 thousand yen |
| Corporations with capital over 100 million yen but less than 1 billion yen |
30 million yen |
30 million yen |
| Corporations with capital over 1 billion yen |
100million yen |
100million yen (Upper limit is 20 billion yen) |
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Employee Training Tax Credits |
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This tax credit will only be available to small and medium sized enterprises (SMEs). If the employee training expense is 0.15% or more of total labor expenses, a tax credit will be available. The tax credit amount will be determined by multiplying a specific rate (between 8-12%) against the gross amount of employee training expenses.
Labor expense is defined as the sum of salary, legal welfare and employee training expenses.
This amendment will be effective for fiscal years which start between April 1, 2008 and March 31, 2009. |
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