Japan intends to create tax breaks for domestically manufactured electric vehicle (EV) batteries and semiconductors beginning in April 2024 in order to improve economic security, according to the Nikkei newspaper on Friday.
The move would be similar to similar industrial policies in the United States and the European Union. The countries aimed at encouraging companies to bring production back home from China, as well as easing the country’s energy transition.
The Ministry of Economy, Trade, and Industry will propose tax breaks for companies manufacturing strategically important items in Japan for the government’s fiscal 2024 tax code revision.
According to the Nikkei, the planned scheme, similar to the US Inflation Reduction Act, would reduce corporate taxes based on battery and chip output. The ministry will draft the specifics, including applicable items, by the end of this year.
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Every spring, the Japanese government revises its tax code after the ruling coalition agrees on a draft and sets the overall course in December.
Furthermore Japan announced billion-dollar subsidies for chipmakers such as Taiwan Semiconductor Manufacturing (2330.TW) and Micron Technology (MU.O). The step was to build plants in Japan, and enacted the Economic Security Promotion Act last year to secure supply chains for strategic goods.
source reuters.com
