RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/JPN/31
26 July 2001
(01-3740)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Questions from the UNITED STATES1
Regarding the Updating Notification of JAPAN2
The following communication, dated 24 July 2001, has been received from the Permanent
Mission of Japan.
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General Question
Q1. Please indicate whether the following prog rammes have been terminated.  If these
programmes have been terminated, have they been replaced by similar programmes?
– Tax Credit for the Increased Expense of Research
− Tax Measures to Strengthen the Management of Small- and Medium-Sized
Corporations
− Special Depreciation on Machinery (Relat ed to the Law of Temporary Measures to
Facilitate Business Innovation)
− Special Depreciation on Machinery for Business Innovation (in the Law on Temporary
Measures for Activation of Specific Re gional Industrial Agglomerations)
− Special Depreciation on Facilities (Rel ating to Law on Temporary Measures for
Enhancing the Control Method of the Food Production Process
− Special Depreciation on the Drift for the Mining Industry
− Special Depreciation on the Payment to Specific Association
− Reserve for Prevention from Mineral Pollution of Metal Mining
− Provision for the Disposal of the Offshore Oil and Natural Gas Field
− Reserve for Preventing Specific Disasters
− Reserve for Searching out New Mineral Beds in and out of Japan
Reply
1. "Tax Credit for the Increased Expense of Research (related to the enterprises which are
legislated by the Law on the Temporary Measures to Facilitate Business Innovation)" was
abolished in March 1999.  (No similar programme replaced this).
                                                     
1 G/SCM/Q2/JPN/30
2 G/SCM/N/60/JPNG/SCM/Q2/JPN/31
Page 2
2. "Special Depreciation on Machinery (related to the Law of Temporary Measures to Facilitate
Business Innovation)" was replaced with "Special Depreciation on Machinery (related to the
Law of Special Measures to Revitalize Industry)" in October 1999.
3. "Provision for the Disposal of the Offshore Oil and Natural Gas Fields" was abolished in
March 2000.  (No similar programme replaced this).
N.B. Measures other than those mentioned above are unchanged.
Tax Credit for the Increased Expense of Research
Q1. For this programme, as well as many throughout your notice that indicate that the
enabling legislation is “Special Taxation Measu res Law,” please indicate the year that the
legislation for this programme came into effect.
Reply
"Tax credit for the increased expense of research (related to the enterprises which are
legislated by the Law on the Temporary Measures to Facilitate Business Innovation)" was introduced
in FY 1995 and abolished in March 1999.
Tax Measures to Strengthen the Management of Small- and Medium-Sized Corporations
Q1. Please indicate the year that the legislation for this programme came into effect.
Reply
This programme came into effect in FY 1987.
Special Depreciation or Tax Credit on the Ma nufactured Machines when Import of Products
Increases
Q1. Are all manufacturers in Japan eligible for this special depreciation?  Is the use of these
provisions contingent on the recipients of th e aid exporting their further-manufactured or
completed good?
Reply
"Additional Depreciation or Tax Credit on the Manufacturing Machines when Import of
Products Increases" was replaced in FY 1999 with "Tax Credit when Import of Products Increases".
Under the new programme, Special Additional Depreciation for Production Machinery3 was
abolished.
Q2. Based on your explanation of how this pr ogramme operates, it is our understanding that
in order to receive the special depreciation, a ma nufacturer must increase the value of products
it imports.  Is this correct?  What is the base period to which the increase in imports is
measured?
                                                     
3 This measure was applied to corporations filing a blue tax return, which mainly engage in
manufacturing industry in Japan, and which use manufacturing machinery in Japan for their manufacturingbusiness.  The special measure before was applied with a view to promoting the import of product, andAdditional Depreciation was applied to manufacturing corporations because the corporation is usually the user
of imported product.G/SCM/Q2/JPN/31
Page 3
Reply
Additional Depreciation was applied when the percentage of increase in product import is
equal to or more than 2 per cent.
"The percentage of increase in product import" was calculated by [((1)-(2)) ÷ (2)].
Where:1. The total amount of imported products in the business year subject to the application of the
measure.
2. The largest total amount of imported products of the businesses year between 1 April 1989
and the businesses years preceding the business year subject to the application of the measure.
Special Depreciation on Certain Machinery Used for High-Technology Industries in the
Designated High-Technology Industrial Areas (“Technopolis”)
Q1. Please describe the criteria used to designate machinery as “high-technology
machinery” and, thus, eligible for the special depreciation under this programme.
Reply
"Special Depreciation on Certain Machinery Used for High-Technology Industries in the
Areas of accumulating High-Technology Manufacturing Industry ("Technopolis)" was abolished in
March 2001.  This special measure was replaced with Special Depreciation on Certain MachineryUsed for High-Technology Industries in the Designated Areas of accumulating High-Technology
Industry".
Q2. In answer to the question concerning duration of the subsidy, you stated “within 16
years after the approval of the “Technopolis” plan.  Please explain what the Technopolis plan is.
Reply
The old measure was applied to a corporation filing a blue tax return, and was applied to
Machinery or Building for factories used for High-Technology Industries in the Areas of
accumulating High-Technology Industry.  The "Technopolis" plan is defined as Development
Programme designated by the Law on Promotion fo r Development of Areas of accumulating High-
Technology Industry (terminated in 1998)".
Grants for Promoting Rationalization and Discontinuance or Change of Business of Salt
Industry
Q1. Please explain the rationale of providing subsidies to companies which have
discontinued or changed their business.
Reply
The monopoly scheme on salt was abolished.  During the transitional period, the scheme is
designed to assist discontinuance or change of business of salt producers and salt wholesalers to
promote structural adjustment of the domestic salt industry.G/SCM/Q2/JPN/31
Page 4
Q2. On what basis does Japan determine the amount of grant to provide to each producer or
wholesaler?
Reply
The required matter is defined in the support regulation of the Salt Industry Centre of Japan
where the financial-affairs minister approved grant of a grant in aid based on the Salt Business Law.
By these support regulations, to the application from the applicant of a grant in aid, the Salt
Industry Centre of Japan conducts examination and investigation, and has delivered the grant in aid.
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