Incentives for job creation

Thursday, October 27, 2011. 15:26

In order to promote job creation, a tax credit is available for companies that increase their number of employees. This is available for company which files blue return with a business year starting among the following period: from 1 April 2011 through 31 March 2014.

Number of employees which must be increased is at least two persons for small to medium entity (SMEs), at least five persons for non-SMEs, and both of which the proportion of the new employee must be 10% above in comparison with the total number of employees present at last business year end. The tax credit JPY200,000/person where the total credit amount must not exceed 20% of the corporate income tax of SME, 10% of non-SMEs. The calculation for the credit is below:

Total Tax Credit for job creation = Qualified Number of New Employees x JPY200,000
(SMEs: Credit limit ≦20% of corporate income tax; Non-SMEs: Credit limit ≦10% of corporate income tax)

Besides the requirement mentioned above, the other requirement a company must fulfill is: the company must file a detailed employment plan to its local Hello Work office within two months of the start of its fiscal year and there must not be any layoff due to the employer’s reasons during the prior and current business year. If the employment plan is accepted, the employer subsequently achieves the qualified number of employees and can furnish a detailed statement to claim for the credit upon filing tax returns, then the company will be eligible for a tax credit for JPY 200,000 per additional employee capped at 20% for SMEs (10% for non-SMEs) of its corporate tax liability.

The publication contains information in summary form and is therefore intended for general guidance only.  This publication is not intended as legal, accounting or other professional advice and should not be relied upon as such.  If legal, accounting or other professional advice or expert assistance is required, the services of a competent professional should be sought.  Neither Reanda nor any related entity shall have any liability to any person or entity that relies on the information contained in this publication.