Japan To Startups: No Tax In Quake-Hit Areas

New companies that set up shop in parts of Japan devastated by a massive earthquake and tsunami in March will be exempt from paying corporate taxes for five years, the government said on Tuesday, as it looks to combat snowballing unemployment in the region.

Startups in special industrial zones in the country’s northeast will be immune from corporate taxes as the country looks to stem an exodus from areas that were already suffering from rapidly shrinking populations prior to the March 11 disaster, Vice Finance Minister Fumihiko Igarashi told reporters after a meeting of the government’s tax panel.

Even though the devastated region accounts for only about 5 percent of Japan’s GDP, economists say it could serve as a testing ground for policies that, if successful, could be tried nationwide to reinvigorate the economy following the disaster that caused material damage worth 17 trillion yen ($221 trillion).

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