Opportunities offered under the Connected Industries tax system
Japan Inbound Tax & Legal Newsletter October 2019, No. 45
Introduced as part of the 2018 tax reform under the Act on Special Measures for Productivity Improvement, the Connected Industries tax system (IoT tax system) provides preferential tax measures to support certain capital investment (i.e. the introduction of systems, sensors, etc.) that boost productivity through collaboration and utilization of data. Companies using equipment, software, machinery or other devices with functions within the scope of the IoT tax system may be entitled to certain tax benefits in the year the assets are acquired, including additional depreciation of 30% on the relevant assets or a tax credit of 3% of the cost of the equipment against their corporate tax liability (increased to 5% in certain instances), assuming the required conditions are met.
This alert outlines the operation of the relief and highlights the types of company that have been successful in applying for IoT tax system incentives. Taxpayers’ plans must be submitted and approved, and the assets acquired, prior to 31 March 2021.
This newsletter explains these topics;
1. Overview of the IoT tax system;
2. Companies utilizing the IoT tax system
* This Article is based on the relevant Japanese or specific country’s tax law and other authorities in effect on the date of this Article. This Article would not be guaranteed updating if there are any changes in Japanese tax law, any other law, or interpretations by the courts or tax authorities thereof after the date of this Article.