Japan Grants One-Year Tax Deferral to Companies with Sharp Revenue Decline Due to COVID-19

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[Asia Economy Reporter Hwang Yoon-joo] The Japanese government is establishing a special system that defers tax and social insurance premium payments for one year for companies whose income has sharply declined due to the spread of the novel coronavirus infection (COVID-19).

According to the Nihon Keizai Shimbun on the 28th, the Japanese government decided to defer tax and social insurance premium payments for companies and sole proprietors whose income has decreased by a certain percentage or more since February. They will not require detailed procedures to prove the connection with COVID-19, and late fees incurred during the one-year deferral will also be waived.

The Nihon Keizai Shimbun reported that this is the first time taxes have been uniformly deferred based on the condition of a "sharp decline in income." The Japanese government had previously deferred tax payments for companies that lacked funds or were affected by disasters during the 2008 global financial crisis and the 2011 Great East Japan Earthquake.

The deferral targets include corporate tax, consumption tax, and income tax for sole proprietors. Social insurance premiums such as pension and health insurance paid by companies are also included.

The ruling Liberal Democratic Party's Tax Research Council plans to specify the conditions for tax deferral within this month and submit a special bill to the ordinary (regular) Diet session. The Nihon Keizai Shimbun added that this special system is also part of the emergency economic measures to respond to the spread of COVID-19, which the Japanese government will announce in early next month.

This content was produced with the assistance of AI translation services.