Taxes won't be imposed for five years on foreign companies that set up new operations in areas hit by the March 11 earthquake and nuclear disaster, national strategy minister Motohisa Furukawa said Wednesday.
"We want to aggressively welcome foreign vitality," Furukawa said at a Bloomberg conference in Tokyo. "We've decided to virtually eliminate corporate taxes for firms that set up new operations in the special recovery zone, including foreign firms."
The government announced the measures earlier this month without specifying whether overseas companies were eligible.
Naoki Iizuka, a senior economist at Mizuho Securities Co., called the tax breaks a "very positive step" that should be extended from the disaster-struck region to the entire country.
Furukawa, 45, said Japan must set an example for countries facing similar challenges to economic growth as it rebuilds from the record earthquake and tsunami. The rise in the yen, power supply cuts and stagnant consumer spending are threatening economic recovery.
"Japan must come up with its own solutions as the frontrunner" among countries with problems such as aging populations and uncertainty over energy resources, Furukawa said. "It's Japan's role to present a new growth model to the world through our reconstruction and recovery process."
The government is compiling measures this week to help companies cope with the strong yen, which poses the risk of hollowing out industry as firms relocate abroad, he said.
Prime Minister Yoshihiko Noda is preparing to present a third stimulus plan of ¥12.1 trillion to the Diet this month to help rebuild.