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  5. METI to Expand Coverage of Subsidies for SMEs to Address New Consumption Tax System

METI to Expand Coverage of Subsidies for SMEs to Address New Consumption Tax System

December 25, 2018

As an effort for the preparation for the new consumption tax system that will start in October 2019, the Small and Medium Enterprise Agency (SMEA) has been implementing support measures for SMEs and small enterprises by granting subsidies in introducing cash registers, upgrading their own systems to place and receive orders and conducting other measures for addressing multiple tax rates. In response to the requests from SMEs and small enterprises across Japan to improve the coverage of subsidies, SMEA will expand the coverage of subsidies relating to the new consumption tax system in order to support businesses in accelerating their preparation for addressing the system.

1. Background

As efforts for the preparation for the new consumption tax system that will start in October 2019, SMEA, in collaboration with SME associations and other bodies, has been raising  awareness of the new consumption tax system through distribution of brochures, convening explanatory meetings, and establishing a counseling system for companies by opening counseling counters. Moreover, it has also been providing subsidies for addressing the multiple tax rates under the system to SMEs and small enterprises to support them in introducing cash registers, upgrading their own systems to place and receive orders, and conducting other measures for addressing multiple tax rates.

In addition, SMEA took into account the requests from SMEs and small enterprises across Japan, including those from SME associations (commerce and industry associations), chambers of commerce and industry, and business cooperatives, as well as the results of the government’s findings on the progress in preparing for the new consumption tax system by businesses, which was released in November 2018. Based on this, SMEA will expand the coverage of the subsidy system as shown in Item 2 below.

2. Overview of the expanded coverage of the subsidy system

(1) Expanding the coverage of eligible expenditures

  1. Concerning SME efforts for preparing invoices for trade between businesses (efforts for addressing the requirement for storing invoices and other documents and reporting them by category), which have been excluded from the coverage of subsidies, the subsidies will cover the expenditures that SMEs will bear in developing and upgrading their own systems for conducting these efforts and introducing package products, office equipment and other necessities.
  2. In addition to the expenditures involving registration of product information, i.e., product master data, which is conducted at the same time as installation of a cash register, the subsidies will also cover expenditures involving registration of such information which is conducted separately from the installation of a cash register. 
  3. Furthermore, the subsidies will cover ticket vending machines that SMEs will install to address the multiple tax rates.

(2) Raising the subsidy rates

The subsidy rates for expenditures that SMEs will bear to install and upgrade cash registers and to upgrade their current systems for placing and receiving orders will increase from the “two-thirds or less” of the expenditures to “three-quarters or less” of the expenditures, in principle. Along with this, the subsidy rates for expenditures that SMEs will bear to introduce only one cash register with a price of less than 30,000 yen will increase from “three-quarters or less” of the expenditures to “four-fifths or less” of the expenditures.

(3) Expanding the coverage of eligible companies

SMEA will improve the operation of the subsidy system so as to broadly cover certain businesses, for e.g., accommodations and hotels, which have been excluded from coverage under the regulations related to the business.

3. Schedule of expanding the subsidy system

Concerning Items 2 (2) and (3) above, SMEA will apply the expanded subsidy system to applicants that file an application on and after January 1, 2019.

Concerning the application guide for explaining application procedures and other information on the expanded subsidy system and other specific details and procedures involving respective items of the expanded subsidy system, SMEA will release them on the website below soon after completing the preparation.

Division in Charge

Corporate Finance and Tax Affairs Division & Policy Planning and Coordination Division, Business Environment Department, SMEA