A plan to give tax breaks to companies making capital investments for decarbonization was on Monday in the final stages of coordination among the government and the ruling parties, sources said.
The tax break is intended as a measure to achieve the government's goal of reducing greenhouse gas emissions to net zero by 2050. It is likely to be included in a tax reform outline for fiscal 2021 that the ruling parties plan to compile as early as Thursday.
The planned tax break would allow up to 10% of the amount of green investment to be deducted from companies' corporate taxes.
The deductions are expected to be tied to the production of items including high-performance lithium-ion batteries for electric vehicles, which the government aims to become more commonplace, and semiconductors with high energy efficiency, among other items, the sources said.
Investments also likely to be covered include switching electric power sources to renewable energy sources and introducing the latest equipment to promote the saving of energy in production processes.
The government believes that the tax reform will lead to an economic recovery led by the private sector by encouraging companies to invest in environmental fields, the sources said.
The government and the ruling parties envision a system in which the government will screen investment plans in advance. For next year's Diet session, they are coordinating to submit legislation to revise the Industrial Competitiveness Enhancement Law to implement the tax break for a three-year period, from fiscal 2021 to 2023.
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