Government agencies and ministries have submitted their tax system reform requests for fiscal 2026, including steps in support of companies affected by the high tariff policy of the United States.

The ruling Liberal Democratic Party and its coalition partner, Komeito, will screen the requests at their tax panels, aiming to draw up late this year tax reform guidelines for the fiscal year starting next April.

To enact related legislation, however, the ruling parties, now short of the majority in both chambers of parliament, need to coordinate with the opposition camp, which is calling for large-scale tax reductions.

The industry ministry requested five-year tax measures to spur corporate capital spending. Specifically, it called for expanding the system allowing companies to deduct a certain proportion of investment from corporate tax payments. The ministry also aims to make lump-sum depreciation for facilities and equipment possible.

The ministry also sought to extend a temporary measure under the system that reduces corporate tax burdens related to research and development activity, in order to help enhance the international competitiveness of Japanese companies.

To support the automotive industry, which is forecast to be heavily affected by the U.S. high tariff policy, the ministry requested the abolition of a levy imposed on automobile purchases based on fuel efficiency levels.

The Financial Services Agency and the Children and Families Agency jointly called for allowing people age under 18 to use the installment investment quota under the Nippon Individual Savings Account (NISA) tax exemption program for small-lot investments.

The installment investment quota is currently available to those age 18 or over. The proposed revision is intended to support child-rearing households.

The Cabinet Secretariat and others proposed the launch of a study on introducing a tax measure to generate funds for infrastructure development and improvement in preparation for weather-related disasters and major earthquakes.

Requests from the Cabinet Office included measures designed to help promote regional revitalization, a signature policy of the government of Prime Minister Shigeru Ishiba, such as a two-year extension of a preferential tax treatment for companies relocating their key functions to regional areas.