Consensus reached on IT, R&D incentives

The government’s Tax Commission reached a basic agreement Friday to propose incentives for companies that invest in information technology or research and development during fiscal 2003.

The panel’s subcommittee members agreed to deduct a certain percentage of spending in IT investment and R&D from firms’ corporate taxes, commission head Hiromitsu Ishi told reporters.

The incentives are aimed at spurring production of new goods and services, according to Ishi, who is also president of Hitotsubashi University.

The Tax Commission is an advisory panel to the prime minister.

Currently, companies receive tax deductions only for increased spending on R&D over previous years. This system is useful to only a few firms because many are reducing R&D expenditures amid the stagnant economy.

While the status of the tax exemption remains undecided, it was suggested in Friday’s meeting that the measures be made permanent.