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Japanese Business Group Urges Lower Taxes for At-Risk Industries

Posted on Apr. 1, 2020

Keidanren has recommended that the Japanese government reduce taxes and delay tax payment deadlines for businesses — especially in the transportation, tourism, and service industries — to mitigate the economic effects of the COVID-19 pandemic.

The Japanese business group published a list of recommended coronavirus relief measures March 30 and called on the government to quickly implement support measures for employees of small and medium-size enterprises who have been forced to telework, tax breaks for canceled events, and tax exemptions for special loans.

Keidanren said SMEs should be allowed to refund losses for the previous two years, regardless of any exceptions for “catastrophic loss.” It also recommended that Japan expand its tax loss carryforward system, reinstate the tax refund system for larger companies, and further reduce property taxes for SMEs.

The business group, which aims to support corporate activities to promote a sustainable economy, also recommended measures to aid Japan’s economy in the long term, including promotion of the digital economy, such as investment in remote services and the development of infrastructure that supports digitalization.

The Japanese National Tax Agency published an FAQ March 25 on tax measures in response to the  coronavirus crisis, including extensions of return filing deadlines and deferred payments for individuals. The tax agency noted that the deadline for self-assessed income tax and gift tax returns has been extended to April 16, and the deadline for self-assessed income tax payments has been extended to May 15. The deadline for payment of individual consumption tax has been extended to May 19.

The National Tax Agency did not detail many tax relief options for businesses, but according to the FAQ, individuals and businesses can apply for a payment grace period of one year. To be eligible for the grace period, it must be difficult for the business or individual to make tax payments at this time, they must be willing to pay the tax, and there must be no delinquency of prior tax payments.

According to a March 24 statement, G-7 nations have enacted a wide range of financial relief packages to mitigate the economic effects of the COVID-19 pandemic. In addition to already enacted measures, G-7 finance ministers and central bank governors said they are providing tax deferrals and grants for affected companies, particularly SMEs.

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