Japan’s Ministry of Economy, Trade and Industry (METI) finalized plans on the 26th to seek fiscal 2027 tax reforms that would change the Wage Hike Promotion Tax System from a total-payroll benchmark to average wages per employee and extend SME eligibility by three years. The change is intended to preserve support for regional SMEs that raise pay while reducing headcount amid population decline; about 270,000 SMEs used the system in fiscal 2024. METI also plans a new Business Portfolio Transformation and Enhancement Promotion Tax System, previously described as a Strengthening Promotion system, that would defer the roughly 30% corporate tax on gains from selling non-core businesses when proceeds are reinvested within a specified period in core-related acquisitions and follow-on spending such as wages and capital expenditure. The measures aim to support wage growth, M&A and corporate restructuring, but face concerns over mechanically higher average wages after layoffs, lost tax revenue and tax avoidance.