The 2025 IT Adoption Subsidy: Program Overview and Amounts
The IT Adoption Subsidy is a priority policy subsidy administered by Japan's SME Agency. For fiscal 2025, the program is organized into two major categories: the Standard Type (Standard Frame) and the Security Measures Promotion Frame (Cybersecurity Frame).
Subsidy amounts and rates:
| Subsidy type | Subsidy amount | Subsidy rate | Eligible expenses | |--------|------|------|----------| | Standard type (lower band) | From JPY 50,000 | 2/3 | Software, adoption fees, maintenance fees, etc. | | Standard type (mid band) | JPY 1.5 million–4.5 million | 1/2–2/3 | Same as above | | Cybersecurity frame | JPY 50,000–3 million | 3/4 | Information security countermeasure tools |
Key features for 2025:
- The maximum Standard Type subsidy raised to JPY 4.5 million (up JPY 500,000 year on year)
- Greater emphasis on cybersecurity measures: the subsidy rate for the cybersecurity frame raised to 3/4, which is 1/12 higher than the standard type
- Prohibition on multiple receipts: the same company may not apply more than once in a single fiscal year; this is subject to the reviewing authority's decision
If a Chinese-owned business in Japan introduces, for example, an ERP system (around JPY 2 million), cloud accounting software (around JPY 300,000), or an inventory management system (around JPY 800,000), the actual out-of-pocket burden after the subsidy can typically be reduced by 1/3 to 1/2.
Eligible Applicants and Requirements
Who can apply for the IT Adoption Subsidy?
Applicants are primarily small and medium-sized enterprises registered in Japan. For Chinese-owned businesses in Japan, the core eligibility requirements are as follows:
Company-size criteria (at least one must be met):
| Industry classification | Capital | Number of employees | |---------|------|--------| | Manufacturing / other | JPY 300 million or less | 300 or fewer | | Wholesale | JPY 100 million or less | 100 or fewer | | Retail | JPY 50 million or less | 50 or fewer | | Services | JPY 50 million or less | 100 or fewer |
Eligibility conditions that Chinese-owned businesses in Japan must satisfy:
- Corporate status: An SME legally registered in Japan (kabushiki kaisha, yugen kaisha, and sole proprietors are also eligible)
- Tax filing status: Financial statements and tax returns filed on time for the past three years
- Security measures: The system to be introduced must meet minimum requirements such as "SECURITY ACTION"
- Obligation to report results within the subsidy period: After the subsidy is granted, a performance report must be submitted within one year of the system's completion date
Points to note:
- Sole proprietors may apply, but the business must be ongoing on a continuous basis
- Certain industries (such as adult entertainment) are excluded
- For group companies, each entity must apply independently
For Chinese-owned businesses in Japan, key review checkpoints include whether the representative holds a valid visa and whether tax filings are properly in order. This is subject to the reviewing authority's decision.
Scope of Eligible Expenses and How They Are Assessed
Under the IT Adoption Subsidy, not every IT investment qualifies. Drawing the line between "eligible expenses" and "ineligible expenses" is critically important.
Eligible expenses
Software and cloud service costs:
- Initial adoption fees and annual license fees for a cloud ERP system (up to two years)
- Adoption and licensing of accounting management software and payroll systems
- Business efficiency tools (RPA, chatbots, etc.)
- Software licenses for on-premises systems
Adoption and operation service costs:
- Consulting fees required for system adoption (at adoption only, up to JPY 1 million)
- Customization and system integration fees
- Employee training costs (within the scope related to adoption, up to JPY 50,000 per person)
- Maintenance and support contract fees (eligible for the adoption fiscal year plus the following year)
Hardware-related (partly eligible):
- Only servers and network equipment essential to system adoption qualify
- Ordinary PC and printer purchases are not eligible
New eligible items for 2025:
- AI adoption service fees: initial costs for introducing generative AI and chatbots
- Data migration and cleansing costs: data-processing costs when migrating from an existing system
Ineligible expenses (common misunderstandings)
❌ Plain hardware purchases (PCs, multifunction printers, etc.) ❌ Maintenance costs for systems you already own (when it is not a new adoption) ❌ Communication costs such as internet lines and telephones ❌ In-house personnel labor costs ❌ Outsourcing fees for preparing applications and reports
Understanding it through a concrete example:
Suppose a Chinese-owned business in Japan plans to introduce a sales management system for its China-facing operations after expansion:
- ✅ Annual license fee for a cloud-based sales management tool (3 years): JPY 1.8 million → JPY 1.2 million eligible (2/3)
- ✅ System adoption consulting: JPY 600,000 → JPY 600,000 eligible
- ❌ Desktop PC purchases for employees: JPY 1.2 million → ineligible
- ✅ Employee training costs: 8 people × JPY 30,000 = JPY 240,000 → up to JPY 400,000 eligible (limited to training)
On average, applicant companies tend to build up JPY 1.5 million–3 million per application in eligible expenses.
The IT Adoption Subsidy Application Process and Timeline
Overview of the fiscal 2025 schedule
The IT Adoption Subsidy does not accept applications year-round; instead, it sets multiple "public-offering periods."
Projected fiscal 2025 schedule (reference values):
| Round | Applications open | Deadline | Results announced | Business period | |-------|-----------|--------|--------|--------| | Round 1 | Feb 2025 | May 2025 | Jul 2025 | Aug 2025–Mar 2026 | | Round 2 | Jun 2025 | Sep 2025 | Nov 2025 | Dec 2025–Jun 2026 | | Round 3 | Oct 2025 | Dec 2025 | Feb 2026 | Mar 2026–Sep 2026 |
*Please confirm details on the SME Agency's official website. This is subject to the authority's announcement.
Detailed steps in the application procedure
Step 1: Advance preparation period (3 months before applying)
- Select the IT tool and vendor to be introduced and obtain quotes
- Prepare required documents (financial statements, business plan, etc.)
- Obtain a "SECURITY ACTION" declaration (if not already obtained)
Step 2: Obtain a gBizID Prime account (1 month before applying)
- Register for "gBizID," Japan's online application system for SMEs
- For sole proprietors: a My Number Card plus a gBizID Prime account is required
- Registration to activation takes about 1–2 weeks, so early preparation is essential
Step 3: Prepare and submit the application (within the reception period)
- Apply through the IT Adoption Subsidy management system (via gBizID)
- Required attachments:
- Corporations: financial statements, balance sheets, and income statements for the most recent two fiscal years
- Sole proprietors: tax returns for the most recent three years
- System quotation and proposal (prepared by the vendor)
- Business plan (A4, 3–5 pages, describing management issues and the effects of IT adoption)
Step 4: Review period (2–3 months)
- Document review: assesses management issues, the reasonableness of IT adoption, and the appropriateness of expenses
- Pass rate: about 65–75% on average over the past three years (as a competitive program, approval is not guaranteed)
- Approved companies receive a notice of adoption decision
Step 5: System adoption and project implementation period (4–8 months)
- Contract with the vendor and begin system adoption
- Keeping receipts and invoices is extremely important (subject to subsidy repayment)
- After adoption is complete, submit a completion notice within 30 days of finishing payment of expenses
Step 6: Performance reporting and subsidy disbursement (1–2 months after project completion)
- Submit a performance report (system adoption completion, effect measurement results)
- After document review, the subsidy is transferred to the designated account
- From transfer to completing the accounting treatment usually takes 30–60 days
Total time required: about 8–12 months from application to receiving the subsidy
If a Chinese-owned business's filing documents are a mix of Japanese and Chinese, certified translation is additionally required, so it is wise to budget an extra 2–4 weeks.
Points Where Chinese-Owned Businesses in Japan May Earn Extra Marks
Scoring factors in the adoption review
The IT Adoption Subsidy uses a scored document review. Even for the same subsidy amount, the quality of the business plan can make the difference between approval and rejection.
Major scoring items (informal, but common industry knowledge):
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Clarifying and quantifying management issues (up to 15 of 100 points)
- Instead of "we want to grow sales by 30%," write concretely: "We currently spend 20 hours a week on order processing; with the new system this drops to 5 hours a week → projected annual labor cost savings of JPY 7.8 million"
- For Chinese-owned businesses, concretely quantifying efficiency gains in Japan–China operations can earn extra marks
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Quantitative forecast of the effects of IT adoption (up to 20 of 100 points)
- Compare KPIs before and after adoption (processing-time reduction rate, cost savings, sales growth rate, etc.)
- Present past cases (e.g., the effects of system adoption at peers in the same industry)
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Reasonableness and appropriateness of project expenses (up to 15 of 100 points)
- Show that you obtained quotes from multiple vendors and selected the best cost-performance product
- State the vendor's past adoption track record and user reviews
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Efforts to secure and develop human resources (up to 10 of 100 points)
- Detail your post-adoption employee training plan
- Describe a roadmap for acquiring digital skills
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Consideration for security and personal information protection (up to 10 of 100 points)
- Describe encryption and backup arrangements for cloud services
- Show compliance with international standards such as GDPR
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Contribution to management innovation and entry into new fields (up to 15 of 100 points)
- Describe the strategic nature of new business development, DX promotion, work-style reform, and the like
Competitive advantages of Chinese-owned businesses in Japan:
- If you plan to build a Japan–China sales and distribution system, emphasizing IT-adoption effects such as "multilingual support" and "exchange-rate management functions" helps you stand out
- Track record: businesses operating across both Japan and China are more likely to be judged as having high potential for efficiency gains
Common Misconceptions When Applying and How to Avoid Them
Common failure patterns
Misconception 1: Assuming "hardware purchases are also eligible"
❌ Wrong: bundling PCs, servers, and multifunction printers into the application ✅ Correct: only server equipment essential and indispensable to system adoption is eligible. Ordinary PC purchases are not.
When a Chinese-owned business introduces a new sales management system, it often bundles the application as "purchase of 10 PCs + system adoption fees," but the PC portion is treated as ineligible, sharply lowering the adoption rate.
Misconception 2: Including all multi-year license fees as eligible expenses
❌ Wrong: applying for the entire three years of cloud annual fees (JPY 1 million/year × 3 years = JPY 3 million) ✅ Correct: eligible expenses cover the adoption fiscal year plus the following year (up to 2 years)
For a 2025 application, eligible expenses cover only fiscal 2025–2026. The fiscal 2027 portion is ineligible.
Misconception 3: Overstating consulting fees
❌ Wrong: including all management consulting related to system adoption ✅ Correct: only consulting directly related to IT adoption (up to JPY 1 million per project)
Fees for general management strategy consultation are ineligible. They are limited to fees for requirements definition of the system to be introduced and for improving existing business workflows.
Misconception 4: Including post-adoption operational improvement costs
❌ Wrong: applying for additional customization costs six months after operations begin ✅ Correct: expenses incurred after the completion notice is filed are ineligible
The subsidy project period runs from "the adoption decision to the submission of the performance report." Any additional investment thereafter is ineligible.
Special points for Chinese-owned businesses in Japan
① Document deficiencies due to language issues
- Grammar check of the Japanese application: Chinese-affiliated companies frequently lose points for imprecise wording
- Countermeasure: ask a Japanese Gyoseishoshi or Zeirishi to review it in advance (guideline fee: JPY 30,000–50,000)
② Deficiencies in visas and employment contracts
- Approved companies are more likely to become subjects of a tax audit
- Discrepancies in the representative's visa, employees' labor contracts, and salary payment records may be flagged
- Countermeasure: verify the completeness of your tax filing status before applying (1–2 months in advance)
③ Credibility of financial statements
- If there are errors in the past three years' tax filings, companies may be asked to repay the subsidy after adoption
- If you have concerns about past filings, ask a Zeirishi to audit the financial statements in advance
- Countermeasure: complete any amended returns on the financial statements before adoption (this takes time, so prepare at least 3 months ahead)
Frequently Asked Questions (FAQ)
Q1: Can sole proprietors apply for the IT Adoption Subsidy?
A: Yes, sole proprietors may apply. The conditions are that you have filed tax returns on time for the past three years and that you are currently running an ongoing business. Unlike corporations, sole proprietors must register a My Number Card together with a gBizID Prime account. In fiscal 2024, about 22% of approved companies were sole proprietors. However, since the stability of the management base is scrutinized more strictly than for corporations, it is important to clearly demonstrate "a five-year business-continuity outlook" in the business plan.
Q2: If I have a subsidiary or branch in China, can I still receive the subsidy?
A: Eligibility is limited to companies legally registered in Japan. If you introduce a system in parallel with establishing a subsidiary or opening a branch in China, it can be eligible as long as the Japanese head office is the one planning to introduce the system. However, you must clearly state in the business plan "how the adoption track record in Japan will contribute to the China operations." Describing responses to technology outflow and security risks toward China can also earn extra marks. Companies planning international business expansion have qualified for extra marks in about 35% of cases.
Q3: How long does it take from application to receiving the subsidy? What is the shortest number of months?
A: The guideline is about 8–12 months in total. In the shortest case: applications open → deadline (3 months later) → results announced (2 months later) → system adoption complete (4 months later) → performance report submitted (1 month later) → subsidy transferred (1–2 months later) = 11–12 months in total. However, for Chinese-owned businesses, document translation verification and cross-checking of tax filing content often add 2–4 weeks, so it is safe to budget 12–14 months in practice.
Q4: About what percentage of applications are approved? What is the chance of rejection?
A: Over the past three years, the adoption rate has been around 65–75%. In other words, this is a competitive subsidy where 1–2 of every 4 applications are rejected. The most common reasons for rejection are: ① an unclear link between management issues and the effects of IT adoption (about 30%), ② inappropriate build-up of eligible expenses (about 25%), and ③ an unconvincing business plan (about 20%). In particular, Chinese-owned businesses tend to be rejected relatively more often for "an unconvincing plan" due to a lack of expressive power in Japanese (informal statistics). Even if rejected on the first application, you can revise and reapply in the second public offering.
Q5: By when should I obtain quotes as eligible expenses? Is it fine to contract before applying?
A: Quotes must already be obtained at the time of application. Contracting or paying before applying is not allowed. Only after the adoption decision do you contract with the vendor for the first time, then complete system adoption and payment within the project period (usually 4–8 months). It is reassuring to allow 3–4 weeks of leeway from obtaining quotes to applying. Since showing comparative consideration of multiple vendors can earn extra marks, we recommend obtaining quotes from at least two companies.
Q6: If, after receiving the subsidy, the system is not completed as planned, is there an obligation to repay?
A: Yes, there is an obligation to repay the subsidy. If, after the performance report is submitted, it is found that the system is not operating normally, you may be required to repay all or part of the subsidy. Specifically, this applies when there is a discrepancy between the contract amount and the actual adoption result (e.g., system adoption incomplete, planned functions not implemented, etc.). Falsifying receipts or invoices, or mixing in ineligible expenses, is also strictly penalized. In fiscal 2023, about 3% of companies were flagged in post-audits. It is recommended to retain contracts and receipts for at least seven years.
Self-Check Lists Before and After Applying
Below is a checklist for Chinese-owned businesses in Japan considering an application:
Pre-application preparation check (2–3 months before)
- [ ] Financial statements and tax returns for the past three years filed on time
- [ ] The IT system to be introduced compared against three or more companies
- [ ] Detailed quotations and proposals obtained from the vendor
- [ ] Management issues organized quantitatively (processing time, cost, sales figures, etc.)
- [ ] The effects of IT adoption can be quantified
- [ ] A SECURITY ACTION declaration obtained (if not already obtained)
- [ ] A gBizID Prime account obtained
- [ ] The content of the Japanese application asked to be reviewed by a Gyoseishoshi or consultant
- [ ] A draft of the business plan (A4, 3–5 pages) prepared
- [ ] A Zeirishi consulted in advance about "accounting treatment of the subsidy after adoption"
Check from adoption to project completion
- [ ] Contract with the vendor concluded
- [ ] Started centralized management of receipts and invoices for eligible expenses
- [ ] A system adoption schedule prepared and progress managed
- [ ] The employee training plan implemented
- [ ] Monthly confirmation of progress on eligible expenses
- [ ] After system adoption is complete, a completion notice submitted within 30 days
- [ ] The performance report prepared carefully (quantifying the adoption effects is important)
Tax and Accounting Treatment After Applying for the Subsidy
After receiving the IT Adoption Subsidy, correct accounting treatment is essential. Many Chinese-owned businesses in Japan handle this incorrectly, so caution is needed.
Example of accounting treatment upon receipt of the subsidy:
System adoption cost JPY 3 million → subsidy of JPY 2 million received (2/3 subsidy rate)
- Capitalize the adoption cost: System adoption cost JPY 3 million / Cash JPY 1 million + Subsidy received JPY 2 million
- Offset the subsidy against profit in the following period: Subsidy received JPY 2 million / Miscellaneous income JPY 2 million
Examples of incorrect treatment:
- ❌ Immediately treating the subsidy as "miscellaneous income" (a fiscal-year mismatch)
- ❌ Deducting the subsidy amount as an expense (becomes a tax-audit target)
Advice for Chinese-owned businesses in Japan: After the adoption decision, we recommend entering into a contract with a Zeirishi for subsidy accounting treatment. The guideline fee is JPY 50,000–100,000. Because more than a year passes from adoption to receiving the subsidy, it spans multiple fiscal years of tax filings, and inaccurate treatment raises the risk of a tax audit.
Summary: Key Points for Chinese-Owned Businesses in Japan to Make Effective Use of the IT Adoption Subsidy
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Understand the program: a competitive subsidy of up to JPY 4.5 million at a subsidy rate of up to 3/4. With an adoption rate of 65–75%, the quality of the application heavily influences approval or rejection.
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Confirm eligibility: sole proprietors may apply, but complete tax filings for the past three years are a prerequisite. Prepare on the assumption that approved companies will become tax-audit targets.
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Scope of expenses: software, cloud services, and adoption consulting are eligible. Hardware (PCs, etc.) is, in principle, ineligible.
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Timing of application: assume 8–12 months overall. Obtaining a gBizID alone takes 1–2 weeks, so early preparation is essential.
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Scoring strategy: quantifying management issues, concretely quantifying the effects of IT adoption, and comparing multiple vendors are scoring points. Companies planning Japan–China business expansion in particular can differentiate themselves by emphasizing those effects.
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Language and tax handling: ensuring the quality of the Japanese application, ensuring the credibility of financial statements, and ensuring the propriety of visas and employment contracts are the special challenges for Chinese-owned businesses in Japan. We strongly recommend consulting a Gyoseishoshi or Zeirishi in advance.
In Closing
The IT Adoption Subsidy is a program that greatly supports the digitalization of Chinese-owned businesses in Japan. However, it takes more than a year from application to receiving the subsidy, and with an adoption rate of only 65–75%, thorough preparation is essential.
If you have any concerns about applying, or if you are unsure whether your company qualifies, we recommend requesting a free consultation from a subsidy consultant specializing in SMEs or from a Zeirishi or Gyoseishoshi experienced in supporting Chinese-owned businesses in Japan. Many support organizations offer a free initial consultation, and a 1–2 hour session can clarify your likelihood of adoption and the direction of document preparation.
We wish your company every success in advancing its DX.