TOKYO: Japan is considering offering tax incentives to companies that adopt digitalization, public broadcaster NHK reported on Saturday. The coronavirus pandemic highlighted a need for firms to digitalize to improve their productivity, which prompted the government to consider steps to support their business reforms by digital technology, it said.

Prime Minister Yoshihide Suga has made "digital transformation" in the nation a key pledge, aiming to streamline business and government processes and spur lacklustre growth in the world's third-biggest economy. The government and the ruling Liberal Democratic Party (LDP) plan to discuss details of corporate tax breaks to be included in next fiscal year's tax revision, targetting mainly mid-sized companies to promote their digital investment, NHK said.

Separately, the government also plans to consider tax incentives for small and mid-sized companies to promote mergers and acquisitions to help boost their competitiveness, the Nikkei business daily reported on Saturday. The premier has said he would take steps to revitalize smaller firms by promoting consolidation and boosting competitiveness.