Japan's DOGE: Which Tax Breaks and Subsidies Will Go

In short: the schemes named, and where each stands now

Based on documents 1 and 4 and reference document 1 of the Cabinet Secretariat's third meeting[Cabinet Secretariat, 3rd meeting agenda and documents (in Japanese)]. Press reports also name the national contribution to metabolic health checks as a candidate, but it does not appear in the distributed documents.

The mortgage tax credit, NISA, iDeCo and the small-asset expensing rule are not named in this self-inspection. The exercise covered "measures expiring at the end of fiscal 2026 and due for discussion in the fiscal 2027 tax reform", so schemes without an expiry date are handled elsewhere.

What is happening: funding the 1% rate takes three stages, and this is "the first"

The council grew out of the LDP-Ishin coalition agreement and first met on 2 December 2025. The fiscal 2026 tax reform of 26 December abolished three national special measures, cut 18 and had ¥363.1 billion returned to the treasury from funds such as the vaccine production fund[Cabinet Secretariat, fiscal 2026 review results (PDF, in Japanese)]. On 31 March 2026 the special bond law gained a clause on "rationalising special tax measures and subsidies", and the second meeting in April took in about 37,000 public proposals[MOF, Fiscal System Subcommittee, 23 April 2026, document 2 (PDF, in Japanese)].

At the third meeting on 9 October the word "funds" was added to the council's name, along with "thorough". The self-inspection found the following.

• 47 national special tax measures: ministries proposed abolishing 1 in the self-inspection; the end-August tax reform requests asked to abolish 2 and extend the other 45
• 74 local special tax measures: none proposed for abolition in the self-inspection; the requests asked to abolish 1 and extend the other 73
• Subsidies: the Children and Families Agency revised about ¥13 billion, the National Police Agency about ¥3 billion, the education ministry ¥2.8 billion. The telework subsidy is abolished
• Funds: the balance is projected at ¥7 trillion at the end of fiscal 2027. The agriculture ministry's loan-guarantee fund for restaurant chains closes at the end of fiscal 2026

Finance Minister Katayama said that "measures with low policy effect should be abolished" and that the government would "review from zero, also using the government tax commission", and that it would "shift up a gear"[MOF, Minister Katayama's press conference, 9 October (in Japanese)]. Chief Cabinet Secretary Kihara described the fiscal 2027 budget as "a budget for budget-formulation reform" and asked ministries to deepen the review towards year-end[Prime Minister's Office, Chief Cabinet Secretary's remarks, 9 October (in Japanese)].

How the tax measures are being reviewed: two SME schemes on the expert panel's table

Special tax measures are time-limited exceptions. Corporate tax alone has 76 of them. In fiscal 2024, 1.51 million companies used them 2.51 million times, and tax credits alone came to ¥2,016.4 billion[MOF, survey of the application of special tax measures, submitted to the Diet in 2026 (PDF, in Japanese)]. The most used measures are below.

The arena is the government tax commission's expert panel on evidence-based tax policy. Its 7th session on 1 September covered the SME wage-increase credit, the reduced rate and investment incentives; the 8th on 9 October covered business succession; the 9th in early November will again take up SME measures[Cabinet Secretariat, 3rd meeting, document 3 (PDF, in Japanese)].

• Wage-increase credit (SMEs): the Finance Ministry showed with full data on about 940,000 firms that there is no bunching of firms just above the thresholds. The SME Agency countered with a survey of about 1,200 firms. A member said "the large-company version was abolished for lack of effect; abolition is appropriate for SMEs too". About 60% of SMEs do not know the scheme
• Reduced 15% rate: "a Lehman-shock special measure that has dragged on", "a flat ¥320,000 cut even for high-income firms, with no behaviour change built in", "no effect on the 60% of SMEs that run losses"

METI has asked to extend both after review. Which way December goes is tracked under item 4 of eight items the fiscal 2027 tax reform outline will decide. The current calculation of the wage credit is in the SME wage-increase credit rises to 35%.

The "viewpoints" for subsidies and funds, and the Autumn Review: ¥7 trillion in funds to be returned

Minister Katayama's five viewpoints for subsidies: can cost-effectiveness be verified by outside experts and evidence-based methods; is there a clear exit strategy such as a shift to loans; is public support covering risks the private sector should bear; is the split between national and local roles right; is there overlap with similar programmes. For funds, the core is to "return idle money to the treasury and switch to multi-year budget authorisations"[Cabinet Secretariat, 3rd meeting, document 2 (PDF, in Japanese)].

For funds, the administrative reform council decided on 30 July not to apply a blanket "three-year rule" for returning unused money, but instead to require "stage gates" that periodically decide whether support continues, to make "revenue sharing" the rule when fund-backed projects turn a profit, and to publish spending quarterly. Discretionary subsidies of ¥100 million or more numbered 444 items and ¥8.0 trillion in the initial fiscal 2025 budget; the fiscal 2026 budget cut, for example, the regional future grant by ¥40 billion and the regional decarbonisation grant by ¥11.5 billion.

The Autumn Review on 12 and 13 November will examine in public four budget programmes (disability welfare services including day services for children with disabilities, grant aid, high-school reform programmes, rural promotion grants) and four funds (the Space Strategy Fund, submarine-cable digital infrastructure, the economic security key technology programme, bio-manufacturing)[Cabinet Secretariat, 3rd meeting, document 4 (PDF, in Japanese)][Administrative Reform Promotion Headquarters, Autumn Review (in Japanese)].

What to do if a scheme affects you: assume anything expiring in March 2027 must be used this year

• SME owners: both the 15% rate and the wage-increase credit apply to fiscal years starting by 31 March 2027. Whether they are extended will not be known until December. It is safest to make wage and investment decisions within the current year, while the present rules apply.
• EV buyers: METI's policy is to "restrain the subsidy amount for high-priced models". Unit amounts may change for registrations from January 2027, so check the timeline for registering this year in when the EV subsidy is paid.
• People expecting marriage or child-rearing funds from parents: the exemption is expected to cover only money placed with a financial institution by 31 March 2027. The background and alternatives are in the lump-sum marriage and child-rearing gift exemption is ending.
• SMEs planning telework: the telework course of the human resources support subsidy ends with fiscal 2026. Apply within the year.
• Firms selected under government funds: rebuild your funding plan on the assumption that support can stop at a stage gate and that profits may have to be shared with the state.

The revenue loss from the 1% rate is reported at around ¥5 trillion a year. Against that, the subsidy cuts that emerged from the ministries' self-inspection total ¥17 billion (press reports), and abolition was requested for 3 of 121 tax measures. Fund balances stand at ¥7 trillion. How serious the funding debate is will become clear at the November Autumn Review and the December outline. The content of the tax cut and its effect on households is explained in food consumption tax falls to 1% from April 2027.

Summary

• The third meeting on 9 October published the ministries' self-inspection. Of 121 special tax measures expiring next year, abolition was requested for 3 (the marriage and child-rearing gift exemption, registration relief for special restructuring, local 5G) and extension for 118
• Subsidy revisions include about ¥13 billion at the Children and Families Agency, ¥3 billion at the police agency and ¥2.8 billion at the education ministry. The telework subsidy ends after fiscal 2026; the CEV subsidy will be restrained for high-priced models
• Fund balances are projected at ¥7 trillion at the end of fiscal 2027. Returning idle money, stage gates and revenue sharing become the rule
• The SME 15% rate and wage-increase credit drew "abolition is appropriate" opinions at the tax commission's expert panel and will be decided in December. Both expire 31 March 2027
• The Autumn Review on 12-13 November examines 8 items including children's day services and the Space Strategy Fund. The 1% rate costs around ¥5 trillion a year, and the funding is settled in December

Sources

• Cabinet Secretariat, "Council of relevant ministers and vice-ministers on the thorough review of special tax measures, subsidies and funds (3rd meeting, 9 October 2026): agenda and documents" (in Japanese): document 1, document 2, document 3, document 4, reference document 1, minutes (all PDF)
• Prime Minister's Office, Chief Cabinet Secretary's remarks at the 3rd meeting (9 October 2026)
• Ministry of Finance, Minister Katayama's post-cabinet press conference (9 October 2026)
• Cabinet Secretariat, MOF and MIC, "Results of the review of special tax measures and subsidies in the fiscal 2026 tax reform and budget" (26 December 2025, PDF)
• MOF, Fiscal System Subcommittee, "Review of special tax measures, subsidies and funds" (23 April 2026, document 2, PDF)
• MOF, "Report on the survey of the application of special tax measures" (submitted to the Diet, February 2026), summary (PDF)
• Nikkei, "Japan's DOGE: EV and metabolic check subsidies also at issue" (9 October 2026), Tokyo Shimbun, "Can the funding for the consumption tax cut be found?" (same day): reports of ¥17 billion in subsidy cuts and a ¥5 trillion revenue loss

This article is general information based on materials published as of 14 October 2026. Abolitions and cuts are finalised in the December ruling-party tax reform outline and the budget bill. Consult a tax professional for individual decisions.