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DX Investment Promotion Tax Incentive


Added by:   OECD analyst
Added on:   29 Jul 2026
Updated by:   OECD analyst
Updated on:   29 Jul 2026

A Japanese corporate tax credit providing up to 5% of eligible cloud/AI investment costs (with a ceiling of 20% of annual corporate tax liability) for companies with government-approved digital transformation plans under the Industrial Competitiveness Enhancement Act.

Name in original language

DX投資促進税制

Initiative overview

The DX Investment Promotion Tax System (DX投資促進税制) was introduced in the FY2022 tax reform, effective from 2 August 2021, and has subsequently been revised and extended. It applies to companies that have obtained 'DX Certification' from METI and have a business plan certified under the Industrial Competitiveness Enhancement Act (ICEA) that sets out investments in cloud services, AI systems, and digital infrastructure to achieve digital transformation across the enterprise. Eligible companies may choose between: a 5% tax credit on qualifying investment costs; or a 30% special depreciation allowance on qualifying assets. The tax credit is subject to a ceiling of 20% of annual corporate tax liability (bundled with the Carbon Neutrality investment credit). Eligible investments include: cloud computing migrations; enterprise AI system deployments; DX-related software and data infrastructure; and digital platform integration. The 2025 Tax Reform Act extended the regime by three years, to fiscal years beginning on or before 1 April 2028, while increasing the minimum qualifying investment size from JPY 20M to JPY 100M, and reducing the special depreciation rate for machinery and equipment from 40% to 35%. The programme is designed to incentivise large-scale, cross-departmental digital transformation rather than point-solution technology adoption.

About the policy initiative