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  5. Revision of FAQ on the Tax System Supporting Wage Hikes and Productivity in Large Enterprises and on the Tax System Supporting Income Growth for SMEs

Revision of FAQ on the Tax System Supporting Wage Hikes and Productivity in Large Enterprises and on the Tax System Supporting Income Growth for SMEs

November 6, 2018

The Ministry of Economy, Trade and Industry (METI) and the Small and Medium Enterprise Agency (SMEA) held discussions on many suggestions and questions submitted to them by the public concerning the Tax System Supporting Wage Hikes and Productivity and the Tax System Supporting Income Growth. In light of these suggestions, METI and SMEA revised the two FAQs for these tax systems respectively in terms of the scope of salary, etc. subject to these tax systems.

1. Outline of the revision of the FAQ on the Tax System Supporting Wage Hikes and Productivity and on the Tax System Supporting Promotion of Income Growth

METI and SMEA held discussions on the many suggestions and questions submitted to them by the public concerning the above systems. In light of these suggestions, they revised the respective FAQs.

Specifically, these FAQs clearly describe some instructions involving taxation, such as a case where if a company offers shopping coupons to its employees as an allowance that constitutes income, the company should include the face amount of the coupons into the total salary, etc. under the tax systems. For details, see the FAQ in Item 3. “Related documents” below.

Highlights of the FAQs (excerpts)

Q.16 Should companies include the face amounts of coupons in the respective cases below into the total salary, etc. calculated under the tax systems?

  • Face amounts of shopping coupons in a case where a company offers such coupons to its employees as an allowance that constitutes income
  • Face amounts of restaurant coupons in a case where a company offers such coupons to its employees as a meal allowance that constitutes income

A.16: In both cases, the face amounts should be included in the total amount of salary, etc., regardless of form of payment (e.g., cash or coupons).

2. Outline of the Tax System Supporting Wage Hikes and Productivity and the Tax System Supporting Income Growth

Under these tax systems, if a company, (which meets certain requirements), increases the amount paid to employees compared to the previous fiscal year, the company can enjoy a corporate tax deduction (income tax deductions as for individual business operators) amounting to a portion of the total amount of the increase.

3. Related documents

For more information, visit the following websites.

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