The Japan Iron and Steel Federation (JISF) has called for revisions to Japan's strategic-sector domestic production tax incentive in its fiscal year 2027 tax reform proposals, seeking greater investment predictability and more reliable support for steelmakers' green transformation.
Production-based tax credits support green steel investment
Introduced under the fiscal year 2024 tax reform, the scheme provides corporate tax credits linked to production and sales volumes in strategic industries where high operating costs can discourage investment. Green steel is among the eligible products, alongside electric vehicles, green chemicals, sustainable aviation fuel and certain semiconductors, with the incentive intended to encourage new domestic investment.
Eligibility changes sought to improve long-term planning
While acknowledging the importance of the government's wage-growth objectives, JISF requested a review of conditions that can prevent companies from claiming tax credits, arguing that the requirements should reflect the scheme's production-based structure and provide greater certainty for medium- to long-term investment decisions.
Federation calls for broader and longer-lasting support
JISF also proposed extending the certification and application periods, raising credit ceilings, broadening eligibility and allowing application of the group tax consolidation system, including retroactive enhancements, to improve support for the higher operating costs associated with green steel production.
Large-scale decarbonization projects require stable incentives
The federation emphasized that steelmaking's lengthy transition and substantial capital and operating expenditure require predictable support, citing approximately JPY 1.2 trillion in large-scale innovative electric arc furnace projects and urging stronger public procurement and measures to stimulate private demand for green steel.
