JAPAN Law and Practice Contributed by: Eri Hirata, Takunori Kono, Naoki Matsumoto and Ikki Kawasaki, Nishimura & Asahi
ble, depending on the circumstances, for transfers of land for agricultural use under specified require- ments. • Public works projects – when land or buildings are sold for projects involving expropriation rights under the Land Expropriation Act or similar laws, a special deduction of JPY50 million is available. This system also applies to land other than farm- land. Special Tax Treatment on Acquisition of Agricultural Land To promote farmland concentration, individuals meet- ing specified conditions who acquire farmland under a certified consolidation plan pursuant to the Act on Promotion of Intermediate Management of Agricul- tural Land benefit from: • a reduction in registration and licence tax from 2% to 1% until 31 March 2029 (this excludes land for agricultural facilities); and • a reduction in real estate acquisition tax by one third of the taxable base until 31 March 2027. Special Tax Treatment on Holding Agricultural Land For fixed asset tax purposes, farmland is classified and assessed as follows. • General farmland – valuation is based on actual sale prices for agricultural use. Burden adjustment measures are applied separately to reduce the effective tax rate. • Farmland designated as productive green areas in urbanisation promotion areas – valuation and tax rate adjustments are applied in the same manner as for general farmland. • Farmland in urbanisation promotion areas – valu- ation is calculated on a par with residential land, using the actual sale price of neighbouring residen- tial land as a basis, minus an amount equivalent to development costs for converting farmland into residential land. Burden adjustment measures are also applied separately to reduce the effective tax rate. • Specified urbanised farmland (located in desig- nated cities within urbanisation promotion areas) – valuation is equivalent to residential land, and
taxation is also imposed at levels equivalent to residential land. Preferential Treatment for Fuel Oil Diesel fuel for agricultural machinery and heavy oil for agricultural use are exempt from diesel fuel deliv- ery tax, petroleum and coal tax, and global warming countermeasure tax, enabling farmers to purchase fuel at post-exemption prices. Preferential Treatment for Capital Investment Under the Smart Agricultural Technology Utilisa- tion Promotion Act, investments in smart agricul- tural machinery or productivity-enhancing equipment (including facilities reducing the use of chemical fer- tilisers and agrochemicals) may qualify for special depreciation. Additional depreciation allowances, beyond ordinary depreciation, reduce the tax burden at the time of introduction. 7.3 Taxation of Financial and Capital Instruments There are no taxes that impose an additional burden exclusively on agriculture. As for preferential measures under the Act on Facilitat- ing Investment, see 2.2 Agriculture-Sector Finance . 8. Dispute Resolution and Enforcement 8.1 Enforcement of Agribusiness Contracts In the agribusiness sector, a wide range of contracts exist, including farmland lease agreements, agricul- tural product sales agreements, and transportation contracts. As in other commercial fields, when a breach of contract occurs, the aggrieved party may seek performance of the contractual obligations or claim damages. 8.2 Litigation and Arbitration Trends in Agribusiness Disputes in the agribusiness sector may be resolved through civil litigation, civil mediation and other ADR procedures, and – where international transactions are involved – international arbitration. In practice, how- ever, most disputes are resolved through civil media- tion or civil litigation.
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