Overview of Preferential Tax Treatment for
Tourist Facilities/Commercial Facilities
~ Program for Tourism Destination Promotion Zones ~
Ⅰ
Overview of Tourism Destination Promotion Zones
(1) Purpose/Overview of the Program
The Program for Tourism Destination Promotion Zones, based on the Okinawa Promotion and Development Special Treatment Act (hereinafter called the "Act"), aims to develop tourism-related facilities catering to domestic and foreign tourists to create attractive tourism destinations with excellent international competitiveness.
Okinawa Prefecture developed the "Tourism Destination Promotion Plan" on July 31, 2012 based on Article 6 of the Act. In this Plan, the whole of Okinawa Prefecture was designated as "Tourism Destination Promotion Zones". When a private entity newly establishes or builds an additional specific commercial facility (hereinafter called "Specified Private Sector Tourism-related Facilities") in the Zones, it is eligible for preferential measures such as investment tax credit on national taxes, reduction or exemption of regional taxes and low-interest loans from the Okinawa Development Finance Corporation.
(2) Specified Private Sector Tourism-related Facilities
Specified Private Sector Tourism-related Facilities which are eligible for the preferential measures of the Program for Tourism Destination Promotion Zones consist of those in ① through ⑤ below. While accommodation facilities are not included in the Specified Private Sector Tourism-related Facilities, they are eligible to apply for the low-interest loan program of the Okinawa Development Finance Corporation.
①Sports/Recreational facilities
Tennis courts, swimming pools, skating rinks, training centers, golf courses, amusement parks, camping grounds, outdoor athletic grounds, marinas, diving facilities, bowling alleys
②Educational/Cultural facilities
Theaters, museums, art museums, zoos, botanical gardens, aquariums, facilities for cultural learning experiences
③Relaxation facilities
Observatories, hot spring bathing facilities, thalassotherapy facilities, international health control/improvement facilities
④Assembly facilities
Conference facilities, facilities for training and seminars, exhibition facilities, wedding venues
⑤Sales facilities
Facilities which satisfy the requirements stipulated in Paragraph 1, Article 8 of the Act are qualified as sales facilities. To utilize the preferential measures as sales facilities, they need to be designated by the Governor of Okinawa in advance.
Accommodation facilities
While accommodation facilities are not eligible for the preferential tax treatment, facilities ① and ⑤ which are part of accommodation facilities are eligible for the treatment.
(3) Eligible entity
An entity eligible for tax exemption is a corporation or an individual (who files a blue return for national taxes) which/who has acquired equipment related to the new establishment or addition of a target facility in Okinawa Prefecture whose acquisition cost is over 10 million yen (100 million yen for business tax).
(4) Period
③
Covered tax items
Target facilities
National tax Regional tax
Low-interest
loan
Designation by the Governor Corporation
tax (investment
tax credit)
Prefectural tax Municipality tax Business
tax
Real estate acquisition
tax
Fixed asset tax (for large-scale depreciation)
Fixed asset tax
Business office tax [Sports/Recreational facilities (11 facilities)]
Tennis courts ○ ○ ○ ○ ○ ○ ○ －
Swimming pools ○ ○ ○ ○ ○ ○ ○ －
Skating rinks ○ ○ ○ ○ ○ ○ ○ －
Training centers ○ ○ ○ ○ ○ ○ ○ －
Golf courses ○ ○ ○ ○ ○ ○ ○ －
Amusement parks ○ ○ ○ ○ ○ ○ ○ －
Camping grounds ○ ○ ○ ○ ○ ○ ○ －
Outdoor athletic grounds ○ ○ ○ ○ ○ ○ ○ －
Marinas ○ ○ ○ ○ ○ ○ ○ －
Diving facilities ○ ○ ○ ○ ○ ○ ○ －
Bowling alleys － ○ ○ ○ ○ ○ ○ －
[Educational/Cultural facilities (7 facilities)]
Theaters ○ ○ ○ ○ ○ ○ ○ －
Museums ○ ○ ○ ○ ○ ○ ○ －
Art museums ○ ○ ○ ○ ○ ○ ○ －
Zoos ○ ○ ○ ○ ○ ○ ○ －
Botanical gardens ○ ○ ○ ○ ○ ○ ○ －
Aquariums ○ ○ ○ ○ ○ ○ ○ －
Facilities for cultural learning experiences ○ ○ ○ ○ ○ ○ ○ －
[Relaxation facilities (4 facilities)]
Observatories ○ ○ ○ ○ ○ ○ ○ －
Hot spring bathing facilities ○ ○ ○ ○ ○ ○ ○ －
Thalassotherapy facilities ○ ○ ○ ○ ○ ○ ○ －
International health control/improvement facilities ○ ○ ○ ○ ○ － ○ －
[Assembly facilities (4 facilities)]
Conference facilities ○ ○ ○ ○ ○ ○ ○ －
Facilities for training and seminars ○ ○ ○ ○ ○ ○ ○ －
Exhibition facilities － ○ ○ ○ ○ ○ ○ －
Wedding venues － － － － － ○ ○ －
Sales facilities designated by the Governor of Okinawa
Sales facilities ○ ○ ○ ○ ○ ○ ○ ○
[Accommodation facilities] *Low-interest loans only
(4) Scope of target facilities
Target facilities are depreciable assets which constitute a residential building or a structure acquired and are used as a Specified Private Sector Tourism-related Facility. An office, a lodging, an accommodation facility, a parking lot, a recreation facility, a restaurant and a shop (tenants, etc.) are not included.
Some target facilities are required to fulfill the requirements provided by laws and regulations.
Scope of target facilities (image)
* In addition to the target facilities (B), the common areas (C) may be eligible for tax exemption when used as a Specified Private Sector Tourism-related Facility.
* A conference facility and a swimming pool developed on the premises of accommodation facilities are considered target facilities (B).
* Sales facilities are required to meet the floor area requirements (over 3,000 m2, accessory facilities: approximately one fourth or more of the floor area of sales facilities).
* For business office tax, there are floor area requirements for buildings (target facilities: one half and more) and the acquisition cost requirements for structures (one half and more of the total acquisition cost).
Facilities which are required to meet certain requirements
Sports/Recreational facilities
①Training centers
A facility should be for exercise mainly using weight lifting equipment and bodybuilding equipment indoors for the purpose of health control and improvement of physical strength.
②Amusement parks
A facility should have recreation facilities such as a merry-go-round and a play train so that visitors can ride them for fun.
③Camping grounds
A facility should be for recreation and camping and should be equipped with a management office, a cooking facility, a tent site, a sewage facility and a restroom.
④Outdoor athletic grounds
A facility should have a considerable number of pieces of recreational equipment made of wood, ropes, etc. placed in the natural landscape for the purpose of sports or recreational activities and should be equipped with a management office and a rest house.
⑤Diving facilities
A facility should be for improvement of the convenience of those who learn how to dive in the ocean and should be equipped with a training room (including a practice pool).
Offices, etc. (A): Not included
(lodging (guest rooms, etc.), restaurants, tenants, etc.)
Target facilities (B)
・Residential buildings and
structures used for target facilities
・ Total acquisition cost > 10 million yen (100 million yen for business office tax)
Educational/Cultural facilities
①Facilities for cultural learning experiences
A facility should be for introducing nature, traditional fine arts, craft products, garden products or life/culture, traditional performing arts or historical records by videos or for visitors to experience the production of traditional fine arts, craft products and garden products or traditional life/culture.
Relaxation facilities
①Observatory
A facility should be equipped with an observation deck for visitors to see scenery such as valleys, the seashore, night views, etc. by utilizing the natural landscape such as heights.
②Hot spring bathing facilities (including those created on the premises of accommodation facilities) A facility should be for the promotion of physical and mental health by using a hot spring and should be equipped with a bath, a health counseling room (should have a doctor, a public health nurse or a nurse) and a rest house. Regardless of what it is called, a bath, a health counseling room and a rest house should be used for their respective purposes and be separated structurally except for a common area.
③Thalassotherapy facilities
A facility should be for treatment, promotion of physical and mental health and research by using sea water, seaweed, sea mud and other ocean resources and should be equipped with a bath, a massage facility and a rest house.
④International health control/improvement facilities It needs to satisfy all the requirements below.
・ The purpose of such a facility should be to promote physical and mental health in coordination with hospitals and clinics.
・ A licensed guide-interpreter, an area designated licensed guide-interpreter, or Okinawa special licensed guide-interpreter or a person with equivalent interpretation skills who has sufficient knowledge useful to facilitate the smooth use of such a facility by foreign tourists should be stationed there.
・ A bath or a swimming pool, a facility for aerobic exercise or a training room and a health counseling room should be provided as equipment.
Assembly facilities
①Conference facilities (including those created on the premises of accommodation facilities) A facility should have more than two meeting rooms and be equipped with the necessary audiovisual equipment. Each meeting room should be separated structurally except for a common area. Rooms separated by partitions are not considered multiple meeting rooms.
Audiovisual equipment required for meetings should be prepared the same number or more as that of meeting room, but it is not required to be installed in each room.
②Facilities for training and seminars (including those created on the premises of accommodation facilities)
A facility should have several seminar rooms, an exercise room and an archive. "Several" means two or more seminar rooms, an exercise room and an archive.
Sales facilities
Sales facilities are defined as those which meet the following requirements stipulated in Paragraph 1, Article 8 of the Act.
Sales facilities need to be designated as such by the Governor of Okinawa Prefecture. For the application procedures for such a designation, contact the Okinawa Industry Promotion Public Corporation or the Tourism Promotion Division of Okinawa Prefecture.
Requirement 1: Facilities should consist of retail facilities, restaurants and accessory facilities. "Accessory facilities" mean commercial facilities other than retail shops and restaurants which have functions as sports/recreational facilities, educational/cultural facilities, relaxation facilities, assembly facilities or facilities that provide tourism-related information, etc.
Requirement 2: The same vendor as that of 1. above should establish retail facilities and restaurants.
Requirement 3: The total floor area of the retail facilities and restaurants should be approximately 3,000 m2 or more.
Requirement 4: The total floor area of accessory facilities should be approximately one fourth or more of that of retail facilities and restaurants.
《Image of target sales facilities》
《Points》
A commercial complex which does not satisfy the four requirements for sales facilities may be eligible for the preferential tax treatment when it has facilities which meet the requirements for "Sports/Recreational facilities", "Educational/Cultural facilities", "Relaxation facilities" and "Assembly facilities".
(5) Non-target facilities
Any facility to which the following applies is excluded from target facilities for the preferential treatment.
[Corporation tax]
①A facility used for the adult entertainment business as stipulated in Paragraph 1, Article 2 of the Act Regulating Adult Entertainment Businesses, etc. as well as for the sex establishments stipulated in Paragraph 5, Article 2 of the said Act
②A facility which offers members and others the right to use the said facility with favorable terms compared to general users (except for a case where rules concerning the use of the facility specify that a general user can use the facility with the same terms as members except for a usage fee)
③A facility attached to an accommodation facility and mainly used by users of the said accommodation facility (with regard to hot spring bathing facilities, international health control/improvement facilities, conference facilities and facilities for training and seminars, except for a case where rules concerning the use of any of the above-mentioned facilities specify that a general user can use the facility with the same terms as users of the said accommodation facility except for a usage fee and where this information can be easily obtained on the Internet and by other means)
[Regional tax]
①A facility used for the adult entertainment business as stipulated in Paragraph 1, Article 2 of the Act Regulating Adult Entertainment Businesses, etc. as well as for the sex establishments (store-based sex establishments) as stipulated in Paragraph 5 (Paragraph 6), Article 2 of the said Act
②A facility which offers members and others the right to use the said facility with favorable terms compared to general users
Offices, etc.
Retail facilities (A) Restaurants (B) Accessory facilities (C)
(6) Overview of preferential tax treatment
Tax Target entity Overview of preferential tax treatment
National tax
Corporation tax (investment tax
credit)
A corporation which files a blue return and the acquisition cost of machinery and equipment, a building and its attached equipment and a structure which constitute a newly established or added target facility is over 10 million yen
・ Deduction of 15% of the acquisition cost of machinery and equipment and 8% of acquisition cost of buildings, related facilities and structures from corporation tax
・ Maximum acquisition cost: 2 billion yen, maximum deduction: 20% of corporation tax (carry-over for up to 4 years)
Regional tax
Business tax
A corporation with the total acquisition cost of machinery and equipment, a building and its attached equipment and a structure which constitute a newly established or added target facility being over 10 million yen
・ Five-year exemption of business tax for new establishments or additions
・ Such an exemption is prorated by the number of employees directly involved in work at a new or added facility.
Real estate acquisition tax
A corporation or an individual with the total acquisition cost of land and a residential building newly acquired for establishment or addition of a target facility being over 10 million yen
・ For land, only when construction of a residential building considered a target facility starts on the said land within one year from the date following the date of acquisition of the land, the tax is exempted for the target building or land which is directly used for the target business. A sales division or marketing division is excluded from tax exemption.
Fixed asset tax
A corporation or an individual with the total acquisition cost of land, a residential building and depreciable assets newly acquired for establishment or addition of a target facility being over 10 million yen
・ F i v e - y e a r e x e m p t i o n o f f i x e d a s s e t tax for land, a residential building and depreciable assets newly established or added
Business office tax
Corporation or individual with the total a c q u i s i t i o n c o s t o f m a c h i n e r y a n d equipment, a building and its attached equipment and a structure which constitute a newly established or added target facility being over 100 million yen
Special Zone for Economic and Financial Revitalization
(lodging and entertainment industry, Nago City only)
To fundamentally reorganize the existing Special Financial Business Zone, facilitate accumulation of various industries and revitalize the economy and finance in Okinawa with an "industry which serves as a basis for the real economy" and "financial industry" as the pillar.
Objective
◆Area: Nago City (designated in April 10, 2014)
◆Target industry: Financial services industry, information and telecommunication industry, tourism industry, agriculture and aquaculture
industry manufacturing industry, etc.
* Tourism industry: (i) Lodging
(ii) Entertainment (except for business, sports associations and any ancillary service such as keirin and horseracing)
◆Preferential measures <selective for ①, ② and ③>
①Income deduction (40%)
Terms (1) A corporation which has a head office or a principal office in the Zone
(2) A corporation which was established in the Zone on April 10, 2014 and after and has been in the Zone for less than 10 years
(3) A corporation which has five and more locally-hired full-time employees in the Zone
* The more a company hires in the Zone, the more benefit it gains in terms of tax exemption.
(Income deduction = Income × 40% Number of employees in the Zone/All employees)
* The Governor of Okinawa certifies target entities.
② Investment tax credit (15%: Machinery and equipment and furniture and fixtures, 8%: Building, etc.) * Applicable to investment in the Zone with limits.
Acquisition cost of machinery and equipment and furniture and fixtures > 1 million yen (10 million yen for building, etc.)
③ Special depreciation (50%: Machinery and equipment and furniture and fixtures, 25%: Building, etc.) * Applicable to investment in the Zone with limits.
Acquisition cost of machinery and equipment and furniture and fixtures > 1 million yen (10 million yen for
building, etc.)
④ Introduction of angel system
Itappliestostockacquisitionbysmall-andmedium-sizedcompaniescertiiedbytheGovernor ofOkinawa.
⑤ Other preferential treatment for business tax, real estate acquisition tax and fixed asset tax
Special Zone for Economic and Financial Revitalization
★ Industries designated by the Governor and certified by the Prime Minister are eligible.
★ There is no restriction on operations conducted outside the Zones.
★ Activities other than target industries are allowed.
★ A company should keep five or more full-time employees.
①Income tax credit
You can include up to 40% of taxable amount (corporation tax) in deductible expenses.
(Example) Income deduction
Income
10 million yen
Income deduction
4 million yen
Corporation tax 3.5 million yen Tax reduction 1.4 million yen 40% income deduction
Before using the Program After using the Program
Income
6 million yen Corporation
tax
2.1 million yen
* Corporation tax rate (national tax + regional tax) = 35%
②Investment tax credit and special depreciation
When newly establishing or adding machinery and equipment, you can deduct from corporation tax or include in expenses as special depreciation a certain amount of that acquisition cost.
(Example) Investment tax credit
Income
10 million yen
Corporation tax
2.5 million yen
Tax reduction
0.45 million yen
Corporation tax
2.05 million yen
Before using the Program After using the Program
Acquisition of machinery (example: 3 million yen)
3 million yen × 15% = 0.45 million yen
* Corporation tax rate (national tax) = 25%
