LDP plans tax breaks to help spread 5G networks

The Liberal Democratic Party’s tax panel is planning to give preferential tax treatment to mobile phone carriers and others to help spread fifth-generation, or 5G, high-speed wireless communications services.

The party wants to allow the amount equivalent to 9 percent of related investment to be deducted from corporate tax, or 30 percent of such spending from taxable corporate income, in a program called special depreciation, Akira Amari, chairman of the Tax System Research Commission told reporters after a meeting Monday.

After consultations with its coalition partner, Komeito, the LDP will include the preferential treatment in a tax system reform package for fiscal 2020 to be compiled this week.

Initially, some called for allowing companies to deduct 30 percent of 5G-related investment from their corporate tax payments. But Amari suggested this proposal was not adopted on the grounds that mobile phone carriers have enough financial strength.

The preferential treatment is expected to cover business operators designated under new legislation to be created by the government with the aim of spreading 5G networks. Moving up schedules for current 5G projects is expected to be a condition for receiving the treatment.

In addition to mobile phone operators, business operators eligible for the tax incentive will likely include those preparing 5G networks for “smart factories” that automatically control production in rural areas suffering from serious labor shortages and for “smart agriculture” utilizing artificial intelligence, also in the countryside.

There are high hopes for 5G technology, which allows users to download a two-hour movie in a few seconds, as key infrastructure supporting a wide range of next-generation technologies, such as remote medical services and self-driving buses.

With Japan lagging behind the United States and China in the development of 5G networks, the industry ministry and other segments of the government have sought measures to promote the infrastructure.

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