12. R&D Tax Credits in Japan 研究開発税制

研究開発税制の概要を英語にしてみました。

The Ministry of Economy, Trade and Industry in Japan provides an overview of Japanese R&D tax credits as of 2021. For more about Japanese tax and accounting, click HERE:

1. General type R&D tax credit 一般型

• 1-A. Non-SMEs 中小企業以外
• 1-B. SMEs 中小企業

2. Additional R&D tax credit 上乗せ

3. R&D tax credit for open innovation オープンイノベーション

The author of this website is not responsible for any damage or loss arising related to this website.

---------------------------------

1. General type 

The deduction of a certain percentage of total R&D costs from corporate tax up to 25% of corporate tax. The details are different between small and medium-sized enterprises ("SMEs"; see 1-B) and non-SMEs (see 1-A).

1-A. Non-SMEs

(1) Credit amount: R&D costs x 2 to 14%

(2) Credit%: 

• Increase%* > 9.4%                     : 10.145% + (Increase% ｰ 9.4%) x 0.35 (up to 14%)
• Increase%   ≥ ｰ 37% and ≤ 9.4%: 10.145% ｰ (9.4% ｰ Increase%) x 0.175
• Increase%   < ｰ 37%                   : 2% 
• Year of establishment or prior 3 year average R&D costs** being zero: 8.5% 

* Increase% = % of (R&D costs－Prior 3 year average R&D costs**) to Prior 3 year average R&D costs
** Prior 3 year average R&D costs: Average deductible R&D costs for last 3 fiscal years
*** If % of R&D costs to Average 4-year sales (i.e., average sales for past 4 [i.e., this and past three] years) > 10%, credit limit and credit % are raised (see 2 below).

(3) Credit limit 

• 25% of corporate tax 
• If R&D costs increase from pre-COVID & sales reduce by 2% or more: Additional 5%  

1-B. Small and medium-sized enterprises ("SMEs": See HERE for a definition)  

(1) Credit amount: R&D costs x 12% to 17% 

(2) Credit%: 

• Increase% > 9.4%: 12% + (Increase% ｰ 9.4%) x 0.3 (up to 17%)
• Increase% ≤ 9.4%: 12%

If % of R&D costs to Average 4-year sales > 10%, credit limit / credit % rise (see 3 below).  

(3) Credit limit: 

• 25% of corporate tax 
• If R&D costs increase from pre-COVID & sales reduce by 2% or more: Additional 5%  
• The limit to be raised by 10% in either of the following
• % of R&D costs to Average 4-year sales >10%
• Increase% > 9.4%                                               

2. Additional R&D tax credit based on % of R&D costs to Average 4-year sales

(1) Credit%* 

General credit% + ([% of R&D costs to Average 4-year sales ｰ 10%] x 0.5) x General credit%      

* Up to 14% (up to 17% for SMEs)

(2) Credit limit

25% + (% of R&D costs to Average 4-year sales ｰ 10%) x 2* 

* The underlined part is up to 10%.

3. R&D tax credit for open innovation

The deduction of a certain percentage of costs for R&D carried out jointly with, or outsourced to, research institutions, universities or other parties, or royalties for intellectual property rights paid to SMEs (collectively "special R&D costs") from corporate tax. Special R&D costs used to receive this open innovation type tax credit may not be used for the general type R&D tax credit. 

(1) Credit amount: Special R&D costs x Applicable % (see below (4)) 

(2) Credit limit: 10% of corporate tax

(3) Conditions  

      (i) Include certain items in the agreement, etc. 

      (ii-a) (For special research institutes) Obtain certification from the institute 

      (ii-b) (For non-special research institutes) Obtain confirmation by the counterparty/third party

(4) Credit%

• Special research institutes / universities: 30%
• R&D venture companies                        : 25%    
• SMEs, private sector companies            : 20%

------------------------------------------
会計税務についての他の記事にご興味ある方はこちらの目次をご覧ください♬

会計税務英語に関する記事です。質問、コメントお待ちしております！Google アカウントを持ってない方は、「Google アカウント」をクリックし、「匿名」か「名前/URL」を選択してからご記入ください！