EXCLUSIVE: Japan to Extend Tax Relief for Hometown Donations by Companies

August 29, 2018

Tokyo- The Japanese government plans to extend a system to give companies tax breaks for donations to local governments tackling regional revitalization, informed sources told Jiji Press on Wednesday.

The corporate-version "furusato nozei" hometown donation system, launched in fiscal 2016, will be extended for five years after its currently scheduled expiration in fiscal 2019, according to the sources familiar with the planning by the Cabinet Office.

The planned extension, aimed at continuing to support local governments in promoting industrial development and responding to population falls, will be included in the Cabinet Office's tax reform request for fiscal 2019, which starts in April next year.

Under the current system, 30 pct of donations for state-certified projects under local governments' regional revitalization plans can be deducted from corporate taxes.

In addition to the extension until fiscal 2024, the Cabinet Office will seek an increase in the ratio of deductible amount to donations.

Under the furusato nozei system, people qualify for income and residential tax deductions if they make donations to prefectures or municipalities of their choice. Jiji Press