[Flash Report] Japan Enacts AI Promotion Act: Overview and Implications for Businesses

Background to Legislation

On 28 May 2025, Japan’s Diet passed the Act on the Promotion of Research, Development, and Utilization of Artificial Intelligence–Related Technologies (hereinafter, the “AI Promotion Act”)—the country’s first statute dedicated exclusively to AI.
Rather than imposing hard-edged regulations or penalties, the Act empowers the national government to monitor technological trends, investigate misuse, and issue guidance to AI providers, thereby easing public concerns while encouraging the wider adoption of AI.

By contrast, the EU’s AI Act, scheduled to take effect in 2024, sets out a comprehensive risk-based regulatory framework with sanctions. Japan’s new law explicitly avoids punitive measures, signaling a policy preference for voluntary compliance and innovation-driven growth.

Two factors prompted Japan to introduce a basic statute despite already having sector-specific rules:

• Lagging investment and adoption. In 2023 Japan attracted only USD 700 million in private AI investment—12th in the world, compared with the United States (USD 67.2 billion). Only 9 % of individuals in Japan have tried generative AI, versus 46 % in the U.S. and 56 % in China.
• Heightened public anxiety. Just 13 % of Japanese respondents believe existing rules keep AI safe, and 77 % think AI should be regulated.

Against this backdrop, the Cabinet argued that a “Basic Act” was needed to fill gaps left by the Penal Code and various sectoral statutes, aiming to make Japan “the world’s easiest place to develop and use AI” while creating a model regulatory framework for other jurisdictions.

Purpose and Core Principles

Article 1 (Purpose) sets forth the Act’s twin goals:

1. Codifying fundamental principles and a national AI strategy, and
2. Establishing the Cabinet-level AI Strategy Headquarters to coordinate policy, thereby enhancing public welfare and sound economic development.

Article 3 (Basic Principles) underscores that AI is vital for economic growth and national security. It calls for:

• Sustaining domestic R&D capabilities and international competitiveness;
• End-to-end promotion of AI—from basic research to real-world deployment;
• Transparency and other safeguards to prevent criminal misuse, data leaks, and IP infringement; and
• International cooperation, enabling Japan to help shape global norms while balancing innovation with risk management.

Key Features of the Act

• AI Strategy Headquarters (AI‐SHQ) Created
  • A new Cabinet body headed by the Prime Minister and comprising all Ministers will oversee AI policy and formulate a cross-ministerial strategy.
• Formulation of an AI Basic Plan
  • The government must adopt a comprehensive AI Basic Plan that lays out mid- to long-term measures, consistent with the basic principles.
• Support for R&D and Infrastructure
  • Measures include funding and shared access to high-performance computing, data centers, and curated datasets.
• Human-Capital Development and Education
  • Initiatives to train and secure AI talent and to promote AI literacy throughout the education system.
• International Alignment and Guidelines
  • Japan will participate actively in rule-making forums (e.g., the G-7 Hiroshima AI Process) and will soon publish guidelines mirroring international principles, such as:
    • Reducing inappropriate AI outputs;
    • Disclosing model mechanisms and risk information;
    • Increasing transparency of training data.
• Research, Monitoring, and Risk Response
  • The state may collect data on domestic and global AI trends, analyze incidents (e.g., deepfakes, privacy breaches, copyright violations), and issue recommendations or warnings to stakeholders.

Implications for Companies and Research Institutions

Because the AI Promotion Act mainly empowers government action rather than regulating private actors, it imposes no direct penalties on businesses. Even so, Article 7 establishes a “duty of cooperation” for AI Utilization Operators—any entity developing or deploying AI in commercial activities.

Key takeaways:

1. Voluntary yet Visible Compliance

• Although the duty is formally non-binding, regulators may expect companies to respond to information requests and follow government guidance—especially where risks to individuals or society are identified.

2. Anticipate Investigations and Corrective Guidance

• The state is authorized to investigate serious misuse, publish findings, and recommend corrective steps. Companies should therefore ensure risk assessments, transparency measures, and guardrails are in place before rollout.

3. Forthcoming Guidelines Will Matter

• Expected guidance on content filtering, model explainability, and training-data transparency may inform contractual warranties, governance policies, and disclosure practices—both in Japan and across global operations.

4. Align with International Standards

• Multinational AI providers should benchmark their AI governance frameworks against emerging Japanese guidelines to maintain market trust and demonstrate responsible innovation.

Next Steps and Follow-Up

The Act takes effect upon promulgation. Within three months, the government must:

1. Launch the AI Strategy Headquarters, and
2. Publish the inaugural AI Basic Plan.

An “ongoing review” clause requires the Cabinet to reassess the Act’s effectiveness in light of technological and socio-economic developments and to pursue amendments if necessary. Businesses should therefore:

• Track the publication of the AI Basic Plan and ensuing guidelines;
• Incorporate any new Japanese requirements into their global AI governance playbooks; and
• Monitor subsequent Diet sessions for revisions or supplementary legislation.

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Whether you’re planning a generative-AI venture and need to fine-tune the business model or simply want a second opinion on legal points, we’re here to help. Feel free to get in touch.

This article is an English translation of the original Japanese article. Please click here for the Japanese original.

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Source Materials

1. Cabinet Office – Outline of the Bill & Key Points (Japanese)

• https://www.cao.go.jp/houan/pdf/217/217gaiyou_2.pdf
• https://www.cao.go.jp/houan/pdf/217/217youkou_2.pdf

Reference

Cabinet Office, “Interim Report of the AI Strategy Council / AI Systems Study Group,” 4 Feb 2025 (Japanese).