Special Taxation Measures Law

The 1957 Special Taxation Measures Law, as amended, provides for special tax treatment of Japanese industrial support for overseas mineral development projects. 

The law allows domestic corporations investing in overseas resource development projects to set aside a certain percentage of the cost of such investments and loans as a reserve and include this as a deductible expense in order to prepare for the risks (price erosion of acquired shares, etc., and bad debt losses) of such investments and loans. In the case of setting aside reserves for projects related to the exploration phase, it is possible to deduct 100% of them as an expense, and in the case of setting aside reserves for projects in the development phase, it is possible to deduct 30% of them as an expense.

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