Japanese Tax Blog in English

日本の税務情報を英語で書くブログ by みなと国際会計事務所

COVID-19 wage subsidy plan for businesses in Japan

time 2020/04/05

We know that it is a difficult time for anybody running a business to sustain their employees and pay salaries while revenues are decreased or even gone. Our clients come to discuss what to do to cope with this unprecedented economic crisis since the Great Depression.

The answers may be different to each client who are all in a different industry or have different business structure. But I presume that there should be general rules that can apply to everybody. One of them is to hold enough cash by getting a loan. You may not need it for now but who knows how long this coronavirus disaster will last.

There is a great news that the government announced a broad package to protect national employment by covering the major part of the cost.

Employers have to pay 60% of their wages if employees are put on hold for a company reason. The Japanese government will cover 67% of the pay for large companies and 80% for SMEs (75% for big companies and 90% for SMEs if they don’t fire employees).

The good point is that it is not limited only to employees who are covered by Employment Insurance but it covers employees who are not enrolled to the insurance as well.

The requirement that one has to be enrolled for more than 6 months is also lifted.

The conditions are:

1) The sales have to be decreased by 5% or more.
2) A plan has to be submitted within the period between Jan 24 to June 30th. (it is allowed to submit even after lay-off takes in place.)

Ministry documentation

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