Welcome to the high-level summary of Covid-19 related actions by the Japanese Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan Programs”; and are extracts from the more detailed information available on the websites of the Japanese Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in Japan are Arai & Co, Mazars, Nagamine & Mishima and ShineWing CPA
Tax Filing Affected
- Individual Income Tax return for FY2019 was due to be filed on March 16, 2020 is now postponed to April 16, 2020.
- Consumption tax returns for individual proprietors, gift tax return and other documents/application, including Report of Overseas Properties are also postponed to April 16, 2020.
Due Date for Quasi Return - Income Tax Return for the decedent Due date of quasi income tax return, including its payment, for the year of decedent’s death should be suspended to April 16th, 2020, if its statutory due date meets in February 27th, 2020, and April 15th, 2020. Exemption of the Due Date Suspension The due dates for the income tax issues below are not suspended.
- Individual income tax return for the year of immigration from Japan; Note: File by the day of immigration.
- Application for reduction on income tax prepayment; Note: File by July 15th, 2020, or November 16th, 2020, if you wish to apply.
Consumption Tax The due dates of filing and payment for consumption tax of sole proprietor were suspended to April 16th, 2020. But such suspension would not be granted to each application forms of some specific notifications or reports intending to change consumption tax status. Withholding Tax The due date for every withholding tax imposed to sole proprietor has not been suspended by this measure. Note that special allowance of suspension would be granted to you if you have some unavoidable reasons (*) which hinder your tax payment in time. You need to appear to your local tax department timely to apply for the grant. *Example of unavoidable reasons
- You or your account staffs got infected or contacted thickly with anyone contagious.
- Your retained tax accountant or its staff has got infected.
- You are staying abroad and you are restricted to exit or enter the country because you could not get issued the valid visa or possibly not.
- Accidentally you have got to miss in keeping your ordinary managemental operations relating with your company, yourself or your tax accountant etc.
- Significant number of accounting staff are obliged to get absent from your office due to urgent close of school programme, the recommendation of work leave to prevent the expansion of contagion, etc.
- Your company decided to act the urgent measures to postpone the shareholder meeting, or like this, to prevent the contagion.
- You are ordered to get contained at home by the Sanitary Department or any medical facilities because of the doubtfulness of contagion. Inheritance Tax The due date for inheritance tax is not suspended. Note that special allowance of suspension would be granted to you if you have some unavoidable reasons (*) which hinder your tax filing and tax payment in time. You need to appear to your local tax department timely to apply for the grant.
Corporate Income Tax Tax filing due date and tax payment due date can be requested for extension when taxpayer cannot file and pay Corporate Tax (as well as Consumption Tax and other taxes) on or before the due date due to the situations caused by COVID-19 where tax payer cannot prepare financial data or tax return for such reasons as:
- taxpayer or their tax advisor cannot maintain ordinary course of business due to infection to the disease, close of office or leave of employees, etc.;
- director or accounting manager of taxpayer is out of country and cannot return to Japan;
- taxpayer postpose general shareholders meeting beyond 3 months after the year-end. Taxpayers have to file the application for the extension within one month from the date when the situation becomes resolved. Filing of the application maybe substituted by writing down the fact that the taxpayer is applying for the extension due to COVID-19 in the blank space of tax return.
- Corporate tax returns that are due within two months of fiscal year-end of the corporation can be extended to three months.
- In the following circumstances taxpayers can request an extension and must file the application within one month in order for the situation to be resolved: - Either the tax payer or the advisor cannot maintain ordinary course of business due to infection to Covid-19 - The director or accounting manager is out of the country and cannot return to the country - The taxpayer postponed the general shareholders meeting beyond 3 months after the year-end.
- When a company offers their product to support people who have suffered from casualty, the cost of the product is allowed as a deduction for Corporate Tax purposes. This deduction applies to offers to respond to urgent needs.
Government Employee Wages Benefits Programs
Employee Adjustment Subsidies
- In cases where productivity of business falls by more than 5% (in productivity or sales revenue over that past three months compared to prior year) due to the effects of Covid-19 the subsidies will cover up to 80% of the “holiday allowance” for small to medium-sized enterprises. The government may cover up to 66% of the “holiday allowance” for large enterprises
- The holiday allowance should be at least 60% of normal salaries
- For employers who have zero contract terminations the government will raise the subsidy rate to 90% for small to medium sized companies and 75% for large companies.
- Businesses will have to create a Business Suspension Plan and submit it to the Labor Union specifying the dates (should be submitted at least two weeks before the start date).
Common Cash Payment
- The government of Japan has compiled a 100,000-JPY payment measure to each individual, and the Prime Minister Shinzo Abe announced the plan publicly on 20th April. Each resident of Japan registered on the Basic Resident Registration System at the period of 27th April, 2020, would be eligible to receive the cash. Hence a resident from other countries has a chance to apply for the 100,000jpy payment from Japan. No income limit, regardless its actual income of prior year and the fact of income decrease. But such cash is assumed to be paid no earlier than middle of this May. The other hand this program is going to be expired in three months from the beginning of acceptance.
Government Loan and Support Programs
Japan adopted JPY108 trillion economic stimulus package to shield Japanese economy from COVID-19 (the “Package). The Package consists of two phases: the first phase of the package aims to stop job losses and bankruptcies amid the fight with COVID-19 while the second phase of the package try to support “V-shaped” economic recovery once the virus is contained. The Package includes various measures ranging from reinforcing medical support, maintaining employment to supporting financing of businesses, including interest-free loan and moratorium of tax payments.
Interest-free Loan/Credit Guarantee for Small Business
- The government has increased support to up to JPY280 million to mitigate the impact of Covid-19.
- See additional qualifications on the government website.
Subsidy for Promoting Productivity of Small Business - This is available capital for small businesses that are building new production lines due to collapse of supply chains or introducing tools for promoting telework efficiencies. The subsidy is up to JPY10 million.
Special Grant to Employer Employers are encouraged to let their employee leave from work with payment as a containment measure to this pandemic. An employer who follows such administrative order can apply for the subsidy to compensate the payment relevant to the contained employee. Special Finance Deal Special deal measures that allow business to finance without interest obligation or have unsecured finance would be available at some private institutions, including local banks and credit unions. As for existing loans, refinance options would be negotiable as to get no-interest and unsecured. Grant Aid Small business which suffers significant income drop would be granted subsidies. To small business: Max 2 million JPY To sole proprietorship: Max 1 million JPY Appreciation of Grant Ratio If Keep Salary If any employers who diminish their business but keep their employments, they could be granted certain additional subsidy ratios. Payment Grace of Tax and Social Insurance Premium Payment obligation of every business relate tax and social insurance premiums could be get postponed if their income fell significantly due to unavoidable reason like Covid-19. Tax Refund by Deficit Carry-Back A corporation whose capital exceeds 100 million JPY but within 1 billion JPY would be eligible to apply for the tax refund by carrying its present deficit back. Note that the company which is owned by the parent company whose capital exceeds 1 billion JPY is not eligible to this program. See government site for more information.
Links to Our Member Firms
Further Covid-19 advice
The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.