Japan Weighs New Tax Breaks to Boost Corporate Investment Amid Spending Debate

Japan’s government is preparing a new round of tax incentives aimed at accelerating corporate investment, according to a report from the Nikkei business daily. The initiative comes even as policymakers intensify discussions on reducing government spending, highlighting the administration’s effort to balance fiscal discipline with economic growth.

Under the proposal, companies could receive a tax credit of up to 7% on capital expenditures, a move designed to encourage businesses to upgrade equipment and expand operations. Another option under consideration would allow firms to begin depreciating newly purchased assets immediately, offering faster tax relief and improving cash flow. These incentives would be implemented under Japan’s existing framework of special tax measures.

In parallel, the government has established a Japanese counterpart to U.S. President Donald Trump’s Department of Government Efficiency (DOGE). This new body is tasked with reviewing tax incentives and ensuring that special measures deliver measurable economic benefits. Its evaluation is expected to influence how aggressively the administration proceeds with the proposed reforms.

The planned tax breaks will be outlined in a comprehensive tax reform package scheduled for release later this month. Early estimates from Japan’s industry ministry suggest the measures could reduce annual tax revenue by roughly 400 billion yen (about $2.6 billion). Despite the short-term fiscal impact, officials appear confident that stronger business investment will stimulate broader economic activity and support long-term growth.

As Japan works to enhance competitiveness, attract investment, and navigate fiscal constraints, these potential tax reforms signal a continued commitment to pro-business policies. The government hopes that by offering more immediate financial incentives, companies will accelerate capital spending and contribute to Japan’s economic revitalization.