TOKYO: Japan will in April set up a tax incentive for companies that bring on more employees with doctoral degrees, aiming to encourage advanced research and help make businesses more competitive.
Eligible companies can receive a corporate tax credit worth 20% of the labour costs tied to increased hiring of PhD graduates. To qualify, a company needs to increase the share of overall research and development wages that go to doctoral degree holders by at least 3% on the year.
The break applies only to employees who earned the degree within the past five years – a provision that aims to cover both recent graduates and existing employees who pursue advanced education to gain new skills. The credit can also be claimed for outside talent who worked in R&D elsewhere for at least 10 years, a provision intended to improve labour mobility for researchers.
The conditions also require employers to give researchers a degree of freedom to choose their own projects. This is intended to put the focus on basic and applied research, and it is expected to exclude such projects as improvements to existing products.
The measure was included in the package of proposed tax code revisions approved by the cabinet in December. The economy, trade and industry ministry hopes to see hundreds of companies use the credit.