Photo/Illutration A Russian company’s fish processing plant in Shikotan Island, part of the disputed Northern Territories off the coast of Hokkaido, in 2019 (Provided by Sakhalin.info)

Japan criticized Russia’s new law that offers tax breaks and exemptions to companies that start operations in the disputed Northern Territories off Hokkaido.

“It is regrettable that Russia decided to introduce such measures,” Chief Cabinet Secretary Hirokazu Matsuno said at a news conference on March 10. “That contradicts Japan’s stance on the Northern Territories and the purpose of our joint economic activities in the four islands over which Japan and Russia have been holding discussions based on agreements between top leaders.”

Matsuno said the Japanese government has reminded Russia about Tokyo’s stance on the islands.

The Northern Territories are four small islands that were seized by the Soviet Union in the closing days of World War II.

Russian President Vladimir Putin on March 9 signed the new law to give preferential tax treatment for 20 years, including exemptions from corporate and fixed asset taxes, to companies that start operating in the Kuril Islands (the Russian name for the Northern Territories and the Chishima Islands) in the Far East.

Corporations that open businesses on the islands in January 2022 or later will be entitled to the benefits, according to the Russian plan.

The period for the preferential tax treatment was initially planned for 10 years, but Moscow later extended it to 20 years.

Putin had announced the tax plan at the Eastern Economic Forum in Vladivostok last September.

He signed it into law after the United States, European countries and Japan imposed tough economic sanctions against Russia over its invasion of Ukraine.

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