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Open Innovation Promotion Tax System


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

A Japanese income-deduction / deductible-expense incentive that supports corporate–startup open innovation by allowing eligible corporations to deduct up to 25% of the acquisition cost of qualifying startup shares, subject to conditions and limits.

Name in original language

オープンイノベーション促進税制

Initiative overview

Introduced as part of the FY2020 Tax Reform (effective 1 April 2020) and administered by METI and the National Tax Agency, the Open Innovation Promotion Tax System allows eligible blue-return corporations to deduct 25% of the acquisition cost of qualifying startup shares from taxable income in the year of acquisition, subject to statutory conditions. The deducted amount is booked to a special account and reversed into taxable income if defined trigger events occur (such as disposal of shares). Investment thresholds: a minimum of ¥100M for acquisitions in domestic Japanese startups; ¥500M for foreign-based startups; ¥10M for SMEs investing in domestic startups. The target startup must be unlisted, incorporated, and have commenced operations within the past 10 years. An M&A-type variant was added for transactions from 1 April 2023, covering majority voting-right control acquisitions. Under the FY2026 Tax Reform Outline (agreed 19 December 2025, enacted March 2026), the application period was extended by a further two years, moving the end date from 31 March 2026 to 31 March 2028.

About the policy initiative


Category:

  • AI policy initiatives, programmes and projects

Initiative type:

  • Business grants/tax incentives

Status:

  • Active

Start Year:

  • 2020

Other relevant urls: