Guidelines for Special R&D costs Tax credit scheme

in May 2015, METI published revised guidelines for the Special R&D costs Tax credit scheme, necessitated by the tax reforms of the Abe government in April 2015.  The Special R&D costs Tax Reduction scheme is one of the R&D tax credit schemes where it is possible to cut part of the costs for experimental research.

In 2015, in order to promote open innovation in enterprises, the Abe Tax Reforms introduced a number of enlargements in this programme:

  1. Substantial expansion of tax credit rate from 12% to 20 or 30%;
  2. Separation of the maximum tax credit (From general amount to separation of cost categories, and setting maximum corporate tax rate of 5%);
  3. Addition of parties for experimental contract research (public service corporations, local government institutions)
  4. Expansion of the range of expensive under the scheme (Addition of license fees of intellectual property rights paid to SMEs) 


The following costs for experimental research can be deducted from corporate tax burden:

  1. Joint experimental research with special research institutions
  2. Joint experimental research with universities
  3. Joint experimental research with other parties (companies, private research institutions, publicly established experimental research institutions)
  4. Cooperative research conducted by technological research associations
  5. Experimental research commissioned to special research institutions
  6. Experimental research commissioned to universities
  7. Experimental research commissioned to specific SMEs
  8. Experimental research conducted with intellectual property rights or consent of specific SMEs (SMEs only)


The guidelines are available (in Japanese) here. Main changes from the previous 2013 edition are:

  • Addition of procedures for tax credits concerning R&D conducted with consent or establishment of intellectual property rights from SMEs
  • Reference method of reports in case of performance of audits and checks at the applicant company and research partner
  • Clarification of the content of audits taking place at the applicant
  • Clarification of the conduct of audits by internal qualified auditors
  • Clarification of the entry-methods of details of costs in piecework paid commissioned research

The basic outline (in Japanese) of the R&D tax credit system can be found  here.

 Source: METI

Checked on: June 2016