Business Subsidies in Japan You Should Know About in 2021

Business subsidies in Japan in 2021 are plentiful and generous, but the application process requires a sturdy constitution and some targeted assistance. 

This article reviews the business subsidies that the central government has in place, eligibility requirements, subsidy amounts, links to official pages for each subsidy, open session deadlines and application periods to be aware of, and more.

The subsidies covered in this article include the following: 

• Manufacturing subsidy「ものづくり補助金」

• IT/software subsidy「IT導入補助金」

• Business restructuring subsidy「事業再構築補助金」

• Temporary aid for alleviating the impact of the state of emergency「緊急事態宣言の影響緩和に係る一時支援金」

Note: Before getting into each subsidy, all subsidy programs and grants listed here require a gBiz account. gBiz is a verification system that enables users to access multiple government programs from one account, eliminating repeated submissions of required documents and concluding all the cumbersome paperwork online. 

Creating a gBiz account takes approximately 2 to 3 weeks and is a prerequisite to applying for all but one of the following government subsidy programs. 

Manufacturing subsidy「ものづくり補助金」

ものづくり補助金 = mono zukuri hojokin

Current open session deadline: May 13, 2021

Official website: https://portal.monodukuri-hojo.jp/

The government's manufacturing subsidy focuses on supplementing the cost of a business's capital investment. This program helps to offset the purchase of manufacturing equipment for new system construction and product development, including machinery and equipment costs, technology introduction costs, expert costs, transportation costs, cloud usage costs, and related expenditures. 

Your business can apply to this if it meets the following eligibility requirements: 

• Your business must have a 3- to 5-year plan. 

• Your business must have value-added +3% or more/year.

• Your business must improve total salary payment by 1.5% or more/year (i.e., have a long-term plan for improving salary payment; the government will check in every year to see if your company is following through with the plan).

• Your business meets regional minimum wage by + ¥30.

Upgrades or improvements in manufacturing are eligible for ¥10 million (up to 1/2 of the investment for SME businesses and up to 2/3 of investment for small businesses). 

If your Japan-based business expands overseas, you are eligible for up to ¥30 million (up to 1/2 of the investment for SME businesses and up to 2/3 of investment for small businesses). 

There is also a category for businesses investing in or implementing new products, services, or systems that prevent spreading the corona virus. This category will receive up to  2/3 of investments for all company sizes. 

However, not all expenditures are eligible for this subsidy; investments must contribute to tangible returns. For example, buying air purifiers for your offices will not be seen as an investment that could significantly increase your sales. This page (Japanese) includes all the links that explain further tiers.  

IT/software subsidy「IT導入補助金」

IT導入補助金= IT dounyuu hojokin

Current open session deadline: June 30, 2021

Official website: https://www.it-hojo.jp/

The government's IT/software subsidy program aims to bolster IT throughout Japan. Currently, the program supplements the costs associated with developing software and IT solutions that improve new customer acquisition, office operations efficiency, and employee productivity. 

For example, the purchase of software or systems that will improve labor and inventory management or promote business automation. The IT/software subsidy program will subsidize the cost of software and tools that cover any of these aims. 

Your business can apply to this subsidy program if it meets the following eligibility requirements: 

• Your business improves total salary payment by 1.5% per year or more (if these goals are not met, the subsidy must be returned).

• Meets regional minimum wage requirements by + ¥30.

• Form goals of improving productivity by 3% for the first year and 9% by the third year through implementing this program.

• Make a statement of one or two stars for the Security Action program conducted by Information-technology Promotion Agency, Japan. (This is a statement declaring that the company will take necessary measures for information security. You can apply for this statement here.) 

Subsidy amounts are up to half of the costs with an upper limit of ¥4.5 million. A COVID-19 category has been created for businesses focusing on improving their telework environment (includes covering rental fees of tablets and PCs). The categories are divided into A and B (Japanese PDF) and C and D (Japanese PDF).  

Business restructuring subsidy「事業再構築補助金」

事業再構築補助金 = jigyou saikou chiku hojokin

Current open session deadline: April 30, 2021

Official website: https://jigyou-saikouchiku.jp/

The restructuring subsidy is a massive government business aid with a total budget of ¥1,148.5 billion. It targets small to mid-sized enterprises making large-scale investments for changeovers, expansion, or restructuring to adapt to the post-COVID-19 era.

This generous government aid covers up to two-thirds of the total investment with the limit of ¥60 million for smaller to mid-sized businesses. The coverage percentage for middle scale enterprises is lower at 50%, but they have a chance to receive up to ¥100 million. There is also a dedicated category with higher coverage rates for businesses hit hard by the state-of-emergency order. 

Refer to the official site for the criteria determining company size and appropriate category.

Your business can apply to this subsidy/grant program if it meets the following eligibility requirements: 

• Your business's revenue for three months out of the past six is less than the same months before March 2020 (pre-pandemic).

• Your business has switched industries, expanded to new markets, or restructured the business model in accordance with the restructuring guideline (Japanese PDF). 

• Your business has formulated a detailed strategy/plan with certified support agencies.

The most challenging part of the application process is formulating a detailed business plan that aligns with the restructuring guideline. It is crucial to effectively articulate why your business move will succeed so that your application will stand out in the screening process, as specific categories with higher premiums have applicant limits that fill out quickly. 

The currently open session deadline is coming up on April 30, 2021. However, there will be further open sessions shortly. If this timeframe is too soon to get your documents in order, we recommend preparing now to apply for the next application period.

Temporary aid for alleviating the impact of the state of emergency「緊急事態宣言の影響緩和に係る一時支援金」

緊急事態宣言の影響緩和に係る一時支援金 = kinkyujitaisengen no eikyokanwa ni kakawaru ichijishienkin

Current open session deadline: May 31, 2021

Official website:  https://ichijishienkin.go.jp/

This subsidy aims to provide financial support to sole proprietors and small to mid-sized businesses that had a drop in sales due to the state of emergency order issued in January this year. If the requirements are met, Sole proprietors can receive up to ¥300,000, and small to mid-sized businesses can receive up to ¥600,000.

Businesses in regions where the local governments issued the state of emergency and supporting enterprises who have dealings with them will be eligible. As long as you can prove the declaration's adverse effects, you can qualify for the subsidy wherever your business is located in Japan.

Your business can apply to this subsidy/grant program if it meets the following eligibility requirements: 

• If your small to medium-sized business experienced a 50% drop in sales compared to figures from 2020 or 2019.

• If you, as a sole proprietor or freelancer, experienced a 50% drop in sales compared to figures from 2020 or 2019.

However, even if the above is applicable, the following business types and organizations will not be eligible for this cash handout:

• Religious or political organizations and institutions.

• Businesses and services that are within the sex industry.

• Bars and restaurants that are receiving kyoryokukin, a subsidy for temporary closure. 

• Businesses outside of the prefectures in a state of emergency that were unaffected by the second state-of-emergency notice.

For a detailed summary of eligibility requirements, please refer to this PDF (Japanese). 

It is important to note that there will be thorough prescreening within the application process to confirm you understand this subsidy's parameters. Your documents will also be examined to verify the current state of your business. This prescreening will be conducted in the form of an interview via video call, phone call, or meeting in person and must be booked in advance.

You will be required to submit numerous items, so ensure all the necessary documents are in order before you make the application.

Finally, unlike the other subsidies listed here, this government program does not require a gBiz account for the application. Instead, you must make a separate account from their official site before moving forward with the application. You can apply for an ID here. 

Some final points

• Applying to some of the government's generous subsidy programs should be viewed as part of an overall long-term strategy and investment in your business because many of the subsidies listed in this article require up-front capital investments as a pre-requisite. 

• All applications to each of these programs must be submitted in Japanese, and the government has provided only the bare minimum English support for questions you may have about eligibility or about the process itself (as far as we are aware). 

• Additionally, the paperwork required for applying to any of these subsidies is time-consuming, and one mistake on an application can trigger lengthy delays.