Note: Japanese domestic programs
The subsidies and tax incentives described on this page are programs offered by the Japanese government and are generally available only to businesses operating in Japan. They are presented here for reference.
Subsidies are not the only way to lighten the burden of capital investment.
With tax incentives, when you acquire a machine tool such as a CNC automatic lathe, you may be able to benefit from special depreciation (earlier expensing) or a tax credit (a direct reduction of the tax due).
Whereas a subsidy cannot be used unless your application is selected, tax incentives are relatively easy for many companies to use as long as they meet the requirements.
This page organizes the main programs as of 2026 (Reiwa 8).
Check the latest information (we strongly recommend consulting a tax accountant)
Tax programs are revised through the annual tax reform, including eligibility requirements, credit rates, and application deadlines.
This page is an overview based on research as of 2026 (Reiwa 8) and does not guarantee applicability or tax calculations in individual cases.
Because many points require judgment, such as capital-amount classifications and whether plan certification is required, always confirm in advance with your tax accountant or the competent tax office.
Main Tax Incentives for Capital Investment
Three main programs relate to acquiring machine tools: the SME Investment Promotion Tax System (Chusho Kigyo Toshi Sokushin Zeisei), the SME Business Enhancement Tax System (Chusho Kigyo Keiei Kyoka Zeisei), and the special fixed-asset tax measure based on an Advanced Equipment Introduction Plan (Sentan Setsubi-to Donyu Keikaku).
They differ in the ease of the procedures and the size of the benefit, so compare them in the table below.
| Program | Main benefits | Eligibility & procedures (as of 2026) |
|---|---|---|
| SME Investment Promotion Tax System | 30% special depreciation of the acquisition cost or a 7% tax credit (the tax credit is limited to companies with capital of 30 million yen or less) | Machinery and equipment: 1.6 million yen or more per unit, etc. No Business Enhancement Plan certification is required, so the procedure is simple. Applies through March 31, 2027 (Reiwa 9). |
| SME Business Enhancement Tax System | Immediate depreciation or a 10% tax credit (7% for capital over 30 million yen) | Requires obtaining certification of a "Business Enhancement Plan" in advance before acquiring the eligible equipment. Larger benefits, but more procedural work. Applies through March 31, 2027 (Reiwa 9). |
| Advanced Equipment Introduction Plan + fixed-asset tax special measure | Reduces the taxable base of fixed-asset tax (depreciable assets) on the acquired equipment (with a declared wage increase: from 1/2 for 3 years up to 1/4 for 5 years) | Requires municipal certification under the SME Business Enhancement Act. Machinery: 1.6 million yen or more per unit, etc. Eligible acquisitions: April 2025 (Reiwa 7) to March 2027 (Reiwa 9). Implementation varies by municipality. |
* Special depreciation and immediate depreciation accelerate the timing of expensing; they differ in nature from a tax credit, which directly reduces the total tax due.
Which is more advantageous depends on each company's situation, so consult a tax accountant.
How to Think About Choosing a Program
If you value simple procedures
The SME Investment Promotion Tax System requires no prior certification such as a Business Enhancement Plan, and its procedures are relatively simple.
It is an easy program to consider when you want a benefit you can count on using first.
If you value the size of the benefit
The SME Business Enhancement Tax System offers larger benefits, such as immediate depreciation and a tax credit of up to 10%, but you must obtain certification of a "Business Enhancement Plan" before acquiring the equipment.
This assumes you pursue plan certification with plenty of schedule margin.
Watch out for programs that require plan certification before acquisition
The SME Business Enhancement Tax System and the Advanced Equipment Introduction Plan special measure require, in principle, certification of the plan before you acquire the equipment.
If you order or acquire the equipment first, the incentive may not apply, so just as with subsidies, the order of the steps matters.
Always confirm in advance with your tax accountant, the competent tax office, or the certification desk.
Relationship with Subsidies
Tax incentives serve a different purpose from subsidies, so depending on your situation you can consider using them separately or in combination.
For example, you might cover part of a capital investment with the New Business Advancement & Monozukuri Subsidies while considering tax incentives for the self-funded portion.
However, assets acquired with a subsidy require careful treatment, so always confirm with a tax accountant whether a combination is allowed and how it is calculated.
For the subsidy-side application flow and key cautions, see also Application Process & Key Points.
For official information on each tax program, see the Small and Medium Enterprise Agency website (https://www.chusho.meti.go.jp/).