Japan to offer tax breaks for certified recycling businesses in recycling push

Japan’s Ministry of the Environment is pushing for new tax incentives to accelerate recycling efforts across the country. Under a proposal unveiled in late August, certified waste recycling businesses would receive temporary reductions in corporate and fixed asset taxes. By easing the tax burden on recycling businesses, the government hopes to encourage industry-wide investment in new technology and infrastructure, enabling companies to recycle waste more efficiently and on a larger scale.

The tax breaks aim to promote the recycling of key resources, such as PET bottles, plastic products, and solar panels, as the nation grapples with growing environmental challenges. Solar panels, in particular, are expected to see a surge in disposal as aging equipment is replaced, raising concerns about waste management.

The proposed tax relief would apply to businesses certified under the Act on the Advancement of Recycling Business, a law that took effect in May 2024. The law encourages resource circulation to reduce greenhouse gas emissions by advancing recycling processes. Companies involved in innovative recycling efforts, such as AI-based waste sorting, bottle-to-bottle PET recycling, the reuse of used diapers, and solar panel recycling, can receive national certification under the act. This certification allows businesses to operate nationwide, bypassing the current requirement of obtaining separate permits from each local government.

The Ministry of the Environment is proposing a four-year reduction in corporate taxes for eligible businesses, alongside reductions in fixed asset taxes for relevant recycling facilities and equipment. Discussions are expected to take place with the ruling party’s tax committee and the Ministry of Finance by the end of 2024, with the measures slated to be implemented in fiscal year 2025.