Name in original language
研究開発税制
Initiative overview
The Japanese R&D Tax Credit System (試験研究費の税額控除) is a long-standing element of Japan's innovation policy, administered by METI and the NTA. The system operates through blue-form corporate tax returns. Core credit (general category): 6–14% of total qualifying R&D expenses, with the rate sliding upward as R&D intensity increases (R&D expenses as a percentage of total expenses); the credit ceiling is 25% of annual corporate tax liability, extendable to 20–30% depending on changes in R&D spending. SME special rate: 12–17%, with a higher base rate to compensate for limited access to other innovation incentives. Open innovation add-on: an additional up to 10% credit for R&D expenses related to joint or commissioned research with universities and certified research institutions; credit ceiling of 10% of corporate tax. From FY2026, a new strategic technologies track was introduced under the FY2026 Tax Reform: 40% credit for R&D expenses related to six 'national strategic technologies' designated by the Cabinet Office (including AI and robotics; semiconductors and communications; quantum technology; space; bio and healthcare; fusion energy); 50% for joint/commissioned research in these areas with certified institutions; ceiling of 10% of corporate tax. In FY2023, approximately JPY 950B in deductions were claimed under the R&D credit system across all categories. Target audience: all Japanese companies conducting qualifying R&D, from SMEs to large enterprises.
