The Japanese government will introduce tax breaks for firms or corporate venturing vehicles backing tech companies to support domestic open innovation practices.
The Small and Medium Enterprise (SME) Agency, an external bureau within Japan’s Ministry of Economy, Trade and Industry, has announced a fiscal incentive for corporate venture capital (CVC) investments.
The policy is intended to last for a year and is part of an open innovation promotion scheme set to come into force in the next fiscal year, which will begin in April 2020.
Japan-based firms or dedicated CVC subsidiaries investing over ¥100m ($910,000) in unlisted innovative companies less than 10 years old can benefit from a 25% corporate income tax deduction under the guideline.
The requirement is reduced to 10% of the standard investment amount if the investing entity is classed as an SME, and it increases fivefold if the funding goes to a company based outside Japan.
In addition, the investor must hold its stake in the portfolio company for a fixed period of five years to be eligible…
