Major fastener-maker YKK Corp. may become the first company to receive tax breaks that the central government plans to offer to Tokyo-based firms that move their headquarters operations outside the capital, according to informed sources.
The government will introduce the tax-benefit program in fiscal 2015, starting April 1, to encourage companies to move their head office operations out of Tokyo's 23 wards as part of efforts to bolster faltering local economies.
YKK is moving part of its back-office functions to Kurobe, Toyama Prefecture, where it has a main factory. A total of 230 employees working in the purchasing, personnel and accounting divisions at its head office will move there by the end of March 2016.
The company aims to decentralize its head office operations to help prevent its business from being suspended when disasters hit, while it expects the start of operations of the Hokuriku Shinkansen Line next month to make it easier to shuttle between the two head offices.
YKK is looking to apply for the program after tax reform bills are enacted during the current Diet session, YKK Chairman Tadahiro Yoshida said. The company has already set up an in-house team to prepare for the application.
The government has been notified of YKK's plan and expects to provide tax relief to the company under the new scheme, the sources said.
Companies that move their headquarters operations out of the central Tokyo area to locations other than Nagoya and Osaka will get a tax reduction equivalent to 7 percent of the amount they invest in office space.
If a company increases employment at the new office, it will receive a tax exemption of up to ¥1.4 million for each newly hired employee during the first three years.