Japan protests Putin's tax breaks plan for islands

Japan has expressed regret over Russian President Vladimir Putin's plan to introduce a tariff-free zone in four Russian-held islands claimed by Japan.

Chief Cabinet Secretary Kato Katsunobu told reporters on Monday the proposal runs counter to an earlier agreement by the two countries to carry out joint economic activities on the islands.

Putin revealed the plan at an international economic forum held in the Russian Far East city of Vladivostok on Friday.

He said Japanese and other foreign companies that do business on the islands will be exempted from key taxes for 10 years. He also said the area would become a tax-free zone.

Kato told reporters that this goes against both Japan's position regarding the Northern Territories, and ongoing talks between Japan and Russia to carry out joint economic activities there.

He disclosed the government made representation to the Russian side on the day Putin announced the plan, urging Moscow to recognize that joint economic activities must take place without harming Japan's legal position.

Russia controls the Northern Territories. Japan claims them. The Japanese government maintains the islands are an inherent part of Japan's territory. It says the islands were illegally occupied after World War Two.