Japan records highest‑ever tax‑arrears bankruptcies in first half of 2026

Tokyo Shōkō Research reported that 97 Japanese companies filed for bankruptcy between January and July 2026 due to unpaid taxes and social insurance contributions, the highest total in a decade. The surge reflects cash‑flow problems at small and medium‑sized firms despite profitability, driven by sustained inflation, rising labour costs and the repayment of COVID‑19 loans.

In Iwate Prefecture, four firms went bankrupt in May 2026, bringing the prefecture’s total to 21 since the start of the year. The combined debt of the May failures reached ¥1.088 billion, up ¥642 million from the previous month, with three mid‑size defaults (over ¥100 million each). Retail accounted for two cases, while construction and services each saw one. Analysts warned that Middle‑East tensions and prolonged price hikes could further increase insolvency rates.