The novel coronavirus pandemic (Covid-19) has propelled a significant number of businesses into an extremely difficult situation.
Experts predict a significant decrease in consumer spending and export in the upcoming months. Japanese tourism industry has already been annihilated by the global restrictions on travelling.
In light of the worsening economic situation, the Japanese government has implemented a number of measures to support virus-hit businesses, both incorporated and individual (freelancers).
Here’s an outline of the latest information on Covid-19 Subsidy , eligibility and application procedures.
*This article is intended to give you a quick overview of the Covid-19 Subsidy. Please contact us for more detailed information.
Table of Contents
WHAT IS THE COVID-19 SUBSIDY?
In April, the Ministry of Economy, Trade and Industry (METI) introduced the Emergency Economic Package to help curb the economic crisis. One of its main components is the Covid-19 Subsidy, or 持続可給付金 Jizokukakyuūfukin in Japanese, which aims at offering financial support for companies and individual businesses (freelancers) affected by the outbreak of the coronavirus and, as a result, experiencing a sharp decrease in their sales.
Unlike loans, the Covid-19 Subsidy does not have to be repaid. Also, it does not entail any complicated process or additional approval. It will be granted to everyone who meets the requirements. Freelance and businesses opened in 2019 are also not excluded.
ELIGIBILITY & PAYMENT AMOUNT
METI began accepting applications for the Covid-19 Subsidy on May 1st, so the official application period is from May 1, 2020, to January 15, 2021. The payments are expected to cover a wide range of sectors. Both companies and self-employed are eligible for the subsidy.
Eligibility
You are entitled to a Covid-19 Subsidy if you satisfy the following eligibility criteria
Your monthly sales have decreased by 50% or more compared to the previous year;
You have had business income before 2019 and are willing to continue your business in the future;
For corporates – your capital is less than 1 billion yen or you have less than 2000 employees (in the case where the capital amount is unspecified);
You opened a business or set up a corporation between January and December 2019. There is one condition, though.
You have fluctuating sales due to the seasonal nature of your business ( both individual and corporate businesses). You need to satisfy one condition.
Sex or religion-related business are not eligible, though.
Payment amount
SME’s hit by the virus will be able to receive up to ¥2 million in cash payments and individual business owners will get up to ¥1 million in cash benefits.
The actual amount of payment, however, will be determined by the total sales of the previous year (the previous fiscal year for an incorporated business)
Individual business owners who did not file the Blue Return or those who did file it, but forgot to attach the Blue-Return Financial Statement (所得税青色申告決算 in Japanese) will be treated the same as the White Return filers. The payment amount is expected to be significantly lower in their case since the sales of the target month will be compared to the monthly average business income of 2019.
HOW TO DETERMINE THE "TARGET MONTH"?
The “target month” can be any month between January 2020 and December 2020, sales of which have decreased by 50% or more compared to the corresponding month of the previous year.
A company with a fiscal year-end in March is allowed to select the sales of any month up until March 2020 for comparison. Sole proprietors, on the other hand, have to choose a month between January 2019 and December 2019.
Click here to see a detailed explanation on how to choose a target month.
If you’re unsure about how to choose the target month, send us your Profit & Loss Statement and we will provide you with a simple analysis free of charge.
NECESSARY DOCUMENTS & APPLICATION PROCEDURE
Both corporate and individual businesses are required to provide their official registered address and bank account information. You will have to attach a copy of your official bank book for confirmation as well. In addition to those, there are other documents characteristic of each type of business to submit.
In most cases, applications will be accepted online. If you’re struggling with an online application, however, you can get support at the consultation counters which will be set up particularly for this purpose. Reservations will have to be booked beforehand, though.
SUMMARY
With a large number of companies and sole proprietors being affected by a nationwide state of emergency declaration, Covid-19 Subsidy is truly a helping hand. The amount of payment, application requirements, speed – every aspect of it is very appealing.
Besides the Covid-19 Subsidy, the Emergency Economic Package offers other policies such as supporting businesses by subsidizing the cost of introducing telework and providing various tax exemption measures and loan relaxations.
▼ More information on the measures for businesses affected by the novel coronavirus can be found in the URL below (in Japanese):
https://www.meti.go.jp/covid-19/pdf/pamphlet.pdf
