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Family Corporations under Japan tax law


A family corporation is a corporation held by individual shareholders and their related persons. Special rules apply to family corporations which need to be considered when an entrepreneurial foreign business enters the Japan market by setting up a subsidiary.

The treatment of donations (kifukin) under Japan tax law


The subject of donations is a complicated topic under Japan tax law,and their scope and deductibility can have an extensive impact certain transactions. The deductibility of a donation (kifukin) depends on the nature of the recipient and its definition under tax law is much broader than its literal meaning

Filing requirements for the Country-by-Country report and Master File for a Specified Multinational Enterprise Group


In response to BEPS Action 13, a three-tiered transfer pricing structure was introduced into domestic tax laws in the 2016 tax reform.

Procedures for claiming tax treaty benefits


Japan has concluded 65 tax treaties which apply to 96 jurisdictions (shown in the Annex). A taxpayer wishing to claim treaty benefits is required to go through certain procedures provided for in the Law concerning special measures to the Income tax law, the Corporation tax law and the Local tax law in relation to executing tax treaties.

Restrictions on interest expense deduction


There are two sets of rules which disallow interest paid to foreign related companies. One is the thin capitalisation rule and the other is the earnings stripping rule. Both rules are targeted rules under BEPS Action 4. A fixed ratio approach where the general deduction of interest expense is restricted to a certain percentage of EBITDA under BEPS Action 4, has not been introduced.

Proposed change to the transfer pricing documentation rules


In the 2016 tax reform proposal, an amendment to the transfer pricing documentation rules was introduced. The proposal is to make the transfer pricing documentation rules consistent with BEPS Action Plan 13.

Group taxation


A 100%-controlled group with a domestic parent company is allowed to file a consolidated tax return for national corporate income. The consolidated filing system cannot be used though, when the parent company is a foreign company. Where a 100%-controlled group does not file a consolidated tax return, there are a few special rules on transactions betweendomestic members.



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