Gov't to grant tax moratorium for virus-hit firms with 20% revenue drop

The Japanese government will grant a moratorium on tax payments by companies that have seen their monthly revenues since February fall by 20 percent or more from the previous year due to the coronavirus epidemic, sources close to the matter said Thursday.
The government aims to help virus-hit firms hold enough cash in hand to continue their business by temporarily exempting them from any sort of tax payment including corporate and consumption taxes as well as social security premiums such as pension and health insurance fees, they said.
Currently, companies that have difficulty in continuing their business can, in principle, seek a one-year tax grace period, on condition they provide collateral and interest. But the new system will exempt them from such requirements, according to the sources.
The plan is expected to be part of the government's economic package to cushion the fallout from the virus outbreak. It will be finalized possibly next Tuesday.
Companies whose monthly sales more than halved from a year earlier for three months between February and October will also be fully exempted from paying property tax on buildings and facilities as well as city planning tax, according to the sources.
Firms seeing sales drops of 30 percent to 50 percent will only shoulder half of such tax payments, they added.
The ruling Liberal Democratic Party and its coalition partner Komeito will discuss other taxation measures to support business operators and households to be included in the package.
Prime Minister Shinzo Abe has pledged to compile the "boldest-ever" stimulus package including cash handouts to households and subsidies to small companies affected by the virus outbreak.
Abe has said the size of the package will be larger than the 56.8 trillion yen ($530 billion) emergency package compiled in April 2009 following the previous year's global financial crisis.
The LDP has called for a 60 trillion yen package including 20 trillion yen of fiscal spending.

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