METI Requests Extension and Expansion of Three SME Capital Investment Tax Provisions (Not Yet Decided)Asking to Keep Tax Perks for Companies Buying Machines (Not Decided Yet)
For the FY2027 (Reiwa 9) tax reform, the Ministry of Economy, Trade and Industry (METI) has requested a 2-year extension with review of the SME management strengthening tax system, an extension with review of the SME investment promotion tax system, and a review of the wage-increase requirement plus a 2-year extension of the fixed asset tax special provision tied to advanced-equipment introduction plans. All are requests only; none has been decided.
Key points
- SME management strengthening tax system: make the requirements for equipment that expands business scale more flexible, review the system selectively based on usage results and policy effects, and extend the deadline by 2 years
- SME investment promotion tax system: currently a choice between a special depreciation of 30% of the acquisition price or a 7% tax credit (the credit only for corporations with capital of JPY 30 million or less and sole proprietors). An extension after review is requested
- Fixed asset tax special provision: currently, under an advanced-equipment introduction plan, a wage-increase policy of 1.5% or more halves the tax base for 3 years, and 3.0% or more cuts it to one quarter for 5 years. Requested: review the wage requirement, expand support for R&D-related investment, and extend by 2 years
- The stated reason is the need to encourage productivity-raising investment and wage increases by SMEs amid labor shortages and rising prices
What to do in practice
- If you plan capital investment, check the current deadlines and requirements
- Check whether the coming tax reform outline shows the content of the review
There are several tax perks for small companies that buy new machines. METI has asked to keep them for about 2 more years and to make them easier to use. But nothing has been decided yet.
- Price of the machine
- JPY 1,000,000
- Amount counted early as expense (30%)
- JPY 300,000
- Amount taken off the tax if the credit is chosen (7%)
- JPY 70,000
Points
- Not decided yet. It is only a request from the ministry
- They want to keep the systems that lower taxes when machines are bought
- They also want them to support companies that raise pay
What the words mean
- Special depreciation
- A special system that lets you count the machine's cost as an expense earlier than usual
- Fixed asset tax
- A tax on land, buildings, machines and the like that you own
- Ministry of Economy, Trade and Industry (METI): Ministry of Internal Affairs and Communications: FY2027 (Reiwa 9) local tax reform request (METI), expansion of the SME management strengthening tax system (PDF)
- Ministry of Economy, Trade and Industry (METI): Ministry of Internal Affairs and Communications: same, extension of the SME investment promotion tax system (PDF)
- Ministry of Economy, Trade and Industry (METI): Ministry of Internal Affairs and Communications: same, expansion of the fixed asset tax special provision for SME capital investment that raises productivity and wages (PDF)
- Ministry of Economy, Trade and Industry (METI): Ministry of Internal Affairs and Communications: list of FY2027 (Reiwa 9) tax reform requests (METI)
This article previews items that are still under consideration or only requested. Whether they will be adopted, and whether the content or timing will change, is not final. Please check the official source again once a decision is made.
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.