Japan

• 13 February: The government announced 1st COVID-19 emergency response package, key measures include home return support for Japanese travelers in abroad, strengthen of immigration control, and loan support for SMEs etc.
• 10 March: The government announced 2nd COVID-19 emergency response package, key measures include expansion of hospital beds for infected patient, additional loan support for companies and strengthening employment support measures etc.
• 7 April: The government announced 3rd emerging economic package to stimulate the economy. Total scale of the package is 117 trillion yen(1.1 trillion USD)  and it is equivalent to 22 percent of the country’s GDP. About 3/4 of the budget was allocated to employment and business support, and the rest was allocated to healthcare system, consumption promotion campaign and public investment etc.
• 8 April: The government issued the declaration of a state of emergency until May 6 for 7 prefectures(Tokyo, Kanagawa, Chiba, Saitama, Osaka, Hyogo and Fukuoka) to prevent the spread of infections. And, The government decided to expand the declaration of a state of emergency nationwide in 16 April
• 14 May: The government lifted the state of emergency for 39 prefectures except for 8 prefectures
• 21 May: The government lifted the state of emergency for 3 prefectures (Osaka, Kyoto, and Hyogo)
• 25 May: The government lifted the state of emergency for 5 prefectures (Hokkaido, Saitama, Chiba, Tokyo and Kanagawa)
• 27 May: The government announced the additional economic stimulus package. Total scale of the package is 117 trillion yen(Same scale as the 3rd emerging economic package) . Key measures include establishment of rent fee support benefits for SMEs and provide subordinated loan for large companies etc.
• 10 November: New PM Suga ordered the formulation of supplementary budget for additional economic stimulus. According to the Japanese media, budget approval expected to be early in the new year.

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

• The government asked people and companies for promotion of telework to prevent the spread of infection

Expansion of employment adjustment subsides program

• MHLW（Ministry of Health, Labor and Welfare） decided to the expansion of employment adjustment subsides program and ease its eligible criteria.
• Employment adjustment subsides program aims to support employers who are suffered from the business downturn but maintain employment by paying leave allowance and letting employees take partly paid leave, rather than firing them
• As a special measures effective from April 1 to December 31, MHLW subsidize maximum 100% of leave allowance for SMEs and maximum 80% leave allowance for large enterprises
• The subsidy is capped at JPY 15,000 a day per employee on the leave.
  

Monetary Policy:

• Doubling the target for net purchases of exchange-traded funds to JPY 12 trillion ($112 billion)
• Agreeing to coordinated foreign swap lines, to lower the cost of borrowing dollars internationally, with the US Federal Reserve
• Establishing a new one-year facility that would offer loans against corporate debt as collateral at a 0% interest rate
• Increasing the upper limit for its purchases of commercial paper and corporate bonds by ¥2tn.

Key business support measures:

Loan for large companies

• Ministry of Finance (MOF) decided to use loan for crisis response. Low interest rate loan provided by Development Bank of Japan(DBJ) . As of End of October, total lending outstanding was \2,012.1 billion(190 cases). According the Japanese media, most of the loan provided for automotive and transportation industries.

Loan, loan guarantee and cash benefit for SMEs

• Ministry of Finance (MOF) decided to use safety net loan(loan limit:JPY720million) and  loan for crisis response(loan limit: JPY300million)  to support SMEs. Low interest rate loan provided by government financial institutions (JFC, Shoko Chukin Bank etc.).
• Ministry of Finance (MOF) established special loan program for novel coronavirus. Low interest rate loan provided by Japan Finance Corporation (JFC) and Okinawa development finance corporation. Loan limit is JPY300milion.
• Ministry of Economy, Trade and Industry (METI) decided to use safety net guarantee program (guarantee limit: JPY280 million) and crisis related guarantee (guarantee limit:JPY280 million) to support SMEs.
• The government established private financial institution’s no-interest unsecured loan provided by utilizing prefectural directed credit programs. The loan limit is JPY30million.
• Ministry of Economy, Trade and Industry (METI) established subsidy program for sustaining businesses. This program targets companies facing severe conditions in particular and provides them with subsidies for a wide variety of purposes that in general are considered effective in supporting them in sustaining or reviving their businesses. Eligible companies can obtain JPY 2 million (Maximum).

Import / Export

• Priority is given to the import and export customs clearance of goods that need to be cleared urgently, such as relief goods related to countermeasures against coronavirus and goods for securing lifelines.

Duty relief

• If it can be confirmed that the goods being imported will be provided free of charge, the duty and JCT imposed on the goods will be exempted. In making a declaration of import of relief goods, etc. pertaining to the said measures, a declaration may be made in a simplified form in the procedures to be followed. 
• Export of relief goods can also be declared using a simple form.

Customs procedures

• In the event that the coronavirus causes difficulties in customs clearance procedures, Japan Customs are providing a flexible response as follows:
  • Declaration at a convenient customs office
  • Handling of seal. (i.e. for items that require the importer/exporter's or customs broker's seal, such seal is not required.)
  • Handling of items for which the original must be submitted or presented in writing (i.e. Documents may be extended or submitted electronically.)
  • Telework of Customs Brokers
• If it is found to be difficult to submit a certificate of origin, the submission will be postponed. Please note that this treatment requires the submission of a certificate of origin of export country itself. Therefore, if importer is unable to submit the Certificate of Origin of the export country, importer will not be able to apply the preferential tariff rate, and importer will need to file an amended return if there is a shortfall in the amount of duty and other tax

Roadmap for resumption of economic and social activities (Tokyo)

• 25 May: Reopen of libraries and museums etc. Indoor event (Under 50 persons) authorized.
• 1 June: Reopen of schools, theaters and cinemas, gyms and department stores etc. Indoor event (Under 100 persons) authorized.
• 19 June: Reopen of music club etc. Indoor event (Under 1,000 persons) authorized.
• 10 July: Indoor event (Under 5,000 persons) authorized.

• For now, the Government of Japan restricts arrival airports for passenger flights from China or Republic of Korea to Narita International Airport (NRT) and Kansai International Airport (KIX) only. The Government of Japan suspends passenger transportation departing from China or Republic of Korea. These measures will be implemented until the end of May. The period can be renewed.

Main sources of information

• Japan: Additional extensions of tax return filing, payment deadlines due to coronavirus (COVID-19)
• PM’s Office
• Bank of Japan
• Japan: Tax relief legislation is passed (COVID-19)
  

Recovery plan : Emergency Economic Measures to Cope with COVID-19
Budget : 234.2 trillion yen
Announcement : April 20(1st package), May 27(2nd package)
Main orientations : tourism, transportation, food service, entertainment business etc.

Basic concepts of economic measures

Two phases are set, considering time frame for strategic implementation of various measures.

• The first phase, "Emergency Support Phase" is the period until the end of the contagion in sight.
• The second phase, "V-shaped recovery phase", refers to the period aiming at achieving strong recovery after the end of contagion by stimulating demands and advancing social structural changes.
• The Government will take timely and decisive actions as needed, with closely monitoring the development of COVID-19 and its impact on the economies and daily life.

Key measures of emergency support phase

• While containing the development of COVID-19, Government thoroughly secures employments, business and daily lives, to maintain solid base for economic recovery after the end of contagion.
• Measures to prevent the spread of infection, build medical treatment structures, and develop and pharmaceuticals :
  • Protecting employment and keeping business viable.
  • Emergency support for Households : Cash payment to all residents in Japan, Additional child allowance 10k per child, emergency microcredit to troubled households, enhance rent support for low income households, reduction or exemption of social security contribution etc.
  • Emergency support for SMEs, etc.: Cash payment to SMEs and Sole proprietors, No interest no collateral loan for SMEs, Reduction or exemption of local property tax etc.
  • Enhancement of the subsidy for leave allowance : From April to December, Subsidy rates are raised for SMEs and Large enterprises.

Key measures of V-shaped recovery phase

• The phase to achieve strong recovery by stimulating consumptions in affected sectors, as well as investments for future such as digitalization and deployment of remote technologies.
• Recovery of economic activities through public and private cooperation as the next phase
  • Support affected sectors, such as tourism and transportation, food service and entertainment business : Providing incentives to consumption expenditure on related areas in form of price discount, voucher or point reward etc.
  • Evitalize regional economy : Supporting agriculture, forest and fisheries, revitalizing inbound tourism through strategic promotion etc.
• Making economic structure more resilient
  • Enhance resilience of supply chain.
  • Facilitate overseas businesses, and strengthen export and domestic production capacities of agriculture, forestry and fishery products and food.
  • Accelerate digital transformation by deploying remote technologies.
  • Frond-load public investment.

Tax: Takayuki Kozu – takayuki.kozu@jp.kpmg.com
Restructuring: Yoshinubu Nakamura – yoshinobu.nakamura@jp.kpmg.com
Legal: Mayu Kato – mayu.kato@jp.kpmg.com