We can exempt taxes only within local tax laws but if we attempt special tax exemptions, for example, of property tax for five years, the Ministry of Home Affairs gives the city 80 percent of the loss for only three years. The other reason is that most local governments cannot boost local tax incentives that might impact their own revenues, argues Nakamura. As of now, the regions receive only 30 percent of the total tax revenue collected from them. Another structural problem that needs to be addressed is the lack of support infrastructure for foreign company needs, argues Dyck. Dyck cites a lack of banking, legal and education services as particular headaches.
Any small company has to take into account the Japanese banking structure setup.
Teradyne happens to use Fuji and Tokyo-Mitsubishi Bank for most of its transactions, but Kumamoto only has one branch of each. Instead, we are doing most of our banking and accounting in Tokyo, with some payroll and accounts receivable at local Kumamoto branches. The other thing is that our CPA firm does not have an office in Kumamoto. The other thing is lack of international education facilities, with the island's only international school situated in Fukuoka, he says. Kyushu needs to get a big magnet.