The Cabinet approved bills on a tax reform package for fiscal 2020 on Friday in an effort to encourage business investment in advanced communications infrastructure and startups with innovative technologies.
The government will submit the bills to the Diet soon, with the aim of having them passed by the end of March.
The annual tax plan, compiled by the ruling parties in December, will give a 15 percent tax credit to companies that invest in building base stations or other infrastructure for ultrafast 5G mobile networks. The measure is intended to promote the spread of the next-generation wireless technology.
The government also plans to let companies deduct 25 percent of such investments from their taxable income when big companies put ¥100 million ($917,000) or more into innovative startups, and small and midsize firms invest at least ¥10 million.
In addition, single parents who have never been married and have an annual income below ¥5 million will become entitled to tax deductions. Currently, only parents who are divorced or have had a spouse die qualify for the preferential tax treatment.
Under the tax reform plan, the Nippon Individual Savings Account, a small-lot, tax-advantaged investment program, will be reviewed to prompt more individuals to shift their money to investments from savings.