Japan: JISF announces tax reform requests for FY’26, development of green steel market in focus

• Federation lobbies for capital investment, green steel tax boosts
• Tax reforms aim to boost competitiveness, align with GX goals

Japan Metal Daily: Japan Iron and Steel Federation (JISF) announced its tax reform requests for the next fiscal year on 23 October 2025. Key requests include the creation of a new capital investment promotion tax system and the expansion of the strategic domestic production promotion tax system, established in the 2024 reform, with a view to creating and expanding a market for green steel. Based on these requests, the federation will lobby the government, ruling party, and other relevant organisations.

The investment promotion tax system is crucial for achieving the government’s public-private domestic investment targets for FY’30 and FY’40; the Ministry of Economy, Trade and Industry (METI) has listed it as a priority tax reform item. The Iron and Steel Federation stressed its necessity for tackling management issues such as enhancing Japanese companies’ international competitiveness and promoting GX (green transformation). It called for the creation of a bold tax system that does not limit the scope of industry or equipment.

The domestic production promotion tax system currently includes green steel, which is characterised by significantly reduced greenhouse gas emissions. The Iron Federation has requested several changes to make the tax system more effective. These include extending the application period, raising the deduction limit, broadening the scope of coverage, and the application of the group total system. They also recommend that this tax system be used in conjunction with the carbon-neutral (CN) investment promotion tax system.

The federation made several additional key tax reform requests to support green transformation, boost competitiveness, and align with environmental goals. These requests included making the exemption from the petroleum and coal tax for raw materials a standard provision and expanding the research and development promotion tax system. Furthermore, the federation sought to abolish the fixed asset tax on depreciable assets, specifically mentioning equipment that contributes to CN initiatives.

Outlook

Japan’s steel industry is expected to maintain a proactive stance in lobbying for tax incentives that support green transformation and competitiveness through FY’26. The JISF reform requests signal continued alignment with the government’s carbon neutrality and GX (Green Transformation) goals. If approved, these measures could accelerate investments in low-emission technologies, stimulate domestic production of green steel, and strengthen Japan’s industrial base. In the short term, policy discussions and government responses to these proposals will shape sentiment and potential investment flows within the sector.

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