SME merchant fee subsidy program – Guidance for credit card / e-money issuers, mobile payment service providers and retailers

Japan Inbound Tax & Legal Newsletter August 2019, No.44

With the increase in the standard rate of Japanese consumption tax (JCT) from 8% to 10% as from 1 October 2019, the Japanese government has introduced a special program (Program) to encourage consumer spending at small and medium-sized enterprises (SMEs) and prevent the contraction of demand while making the country a more cashless society.

The Program, which will be implemented over the nine-month period from 1 October 2019 to 30 June 2020, consists of the following four sub-programs:

1. A subsidy for point rewards to consumers making cashless payments at registered SMEs;

2. A subsidy for merchant fees charged by cashless payment providers (CPPs) to registered SMEs;

3. A subsidy for CPPs’ cashless payment device costs; and

4. A subsidy for other relevant CPP costs.

This newsletter focuses on the second sub-program, i.e. a subsidy for merchant fees charged by CPPs to registered SMEs, as further clarified in "Merchant Fee Subsidy Application Guidelines” (Guidelines) published in August 2019.

This newsletter explains these topics;

1. Overview

2. JCT treatment

3. Corporate tax treatment

4. Conclusion

(225KB, PDF)

* This Article is based on the relevant Japanese or specific country’s tax law and other authorities in effect on the date of this Article. This Article would not be guaranteed updating if there are any changes in Japanese tax law, any other law, or interpretations by the courts or tax authorities thereof after the date of this Article.

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