Japan tax bulletin

The blue tax return system and its benefits

2017/12/15

The “blue tax return” system (named for the color of the tax form) was initiated following a recommendation by the Shoup Mission in 1950 in order to promote the use of modern accounting methods by taxpayers with conferring certain benefits on the “blue form” tax filers.

Research and development tax credits under Japan tax law

2017/11/15

Japan tax law contains an exemption system for research and development expenses as a tax incentive measure for enterprises conducting research and development (“R&D”). In the 2017 tax reform, development of the “fourth industrial revolution type service”, such as big data, was added to the list of qualifying activities.

Tax Procedures at the time of Dissolution and Liquidation

2017/10/19

In some cases the shareholders of a company may wish to withdraw from the Japan market due to poor business results or other internal reasons. In these situations, Company Law prescribes the procedures that need to be undertaken to dissolve and liquidate the company.

Treatment of estimated expenses under Japan tax law

2017/08/14

Deductible expenses under Japan corporation tax law are determined as follows: 1) Cost of goods sold (COGS) 2) Selling, general and administrative expenses (SGA) 3) Losses The amount of allowable expenses is computed according to generally accepted accounting principles (GAAP) and with some adjustments under Japan tax law.

Size-based business taxation in Japan

2017/07/14

Size-based business tax is a component of Enterprise tax and is levied on a company’s business scale, not on the size of its profit. The tax applies to corporate taxpayers with share capital of more than JPY100M at the end of a fiscal year. The tax basis consists of three factors,taxable income, value added and paid in capital.

Revised Transfer Pricing Documentation requirements

2017/06/15

The major reform of Transfer pricing documentation rules was made in 2016 and the relevant law and legulation were changed. This reform was made as a response to Organisation for Economic Co-operation and Development (OECD) Base erosion and profit shifting (BEPS) Action Plan 13. The National Tax Agency issued four guidelines, as shown below, that provide concrete explanations and practical examples related to this reform for the members of multinational enterprise in Japan.

Penalty taxes

2017/05/07

Penalty taxes in Japan can be complicated, with the amounts and types imposed depending on a variety of factors. They consist of penalty tax for under-reporting/non-filing etc as an administrative penalty and delinquency tax as interest.