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The government should include such incentives in the annual budget for fiscal 2019 and fiscal 2020, the policy review showed.
The government will aim to improve public finances by returning to a primary budget surplus in fiscal 2025, according to the review, which was approved at a meeting of the government's top advisory panel on Tuesday.
The policy review also proposed a new visa scheme to open the door to more foreign workers with specific skills as the country grapples with a labour shortage due to an ageing population and a low birth rate.
Around the middle of every year the Japanese government approves a strategy review that lays out the priorities for fiscal and economic policy for the following year and beyond.