TOKYO -- The Japanese government will create a special system to provide a one-year grace period for companies to pay tax and social insurance premiums due to the spread of the coronavirus, the Nikkei has learned.
The period will cover the payment of corporate tax, sales tax and social insurance premiums. The government will exempt delinquent tax and will not ask companies to provide collateral.
The unprecedented measure comes amid slowing economic activity after the central and local governments have asked citizens to stay home and refrain from large gatherings as a way to slow the spread of COVID-19.
Any companies or self-employed business operators whose sales have sharply dropped since February will be eligible to receive the benefit.
They do not have to prove that decreased income is caused by the coronavirus if it declined beyond a certain percentage level during an approximate one-month period. The government will decide on the percentage.
The measure marks the first time for the government to designate "sharp declines in income" as a single condition for offering such a grace period or exemption for delinquent tax.
The government aims to incorporate the establishment of the special system into a package of urgent economic measures to bolster the economy that it will compile in April.
The grace period will cover a wide range of taxes including sales tax, corporate tax, and income tax that business operators declare to tax authorities. Social insurance premiums such as for pensions and health insurance will also be covered by the special measure.
The financial closing period for many companies in Japan comes in March and they must make declarations to tax offices by the end of May. The ruling coalition will decide on the details this month and submit legislation during the Diet's ordinary session. The government aims to pass the bill and start the grace measures as soon as possible.