Accounting for Japanese civil law partnerships

October 16, 2010  |  Entities, Nin i Kumiai, Tax and Accounting  |  No Comments

Performing the 'Bon Odori' or 'Bon Festival Dance', a traditional element of the O-Bon Buddhist festival commemorated in Japan each August for over five hundred years.

This article discusses the basic Japanese accounting treatment of membership of Japanese civil law partnership, in Japanese a nin’i kumiai and below an NK.

An overview of the legal aspects of an NK arrangement can be found in this article, which also includes defined terms or abbreviations used here.

A description of the tax treatment can be found in this article.

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Joint venture formation and enterprise combination accounting

Criteria for a Japanese enterprise combination to be treated as a JV Formation

This article consists of a flowchart which applies the criteria used to determine whether or not an enterprise combination is treated as a JV Formation transaction under Japanese accounting standards.  The background to this treatment and the related standards is explained in this article. Read More

Japanese accounting for mergers and other enterprise combinations

A mendicant Buddhist outside Ueno station.

A mendicant Buddhist outside Ueno station.

This article discusses how mergers, takeovers and similar enterprise combinations are accounted for in Japan.
The articles looks at which accounting standards apply, the different categories of enterprise combinations defined in those standards and finally how purchase accounting Read More

Expected useful lives of intangible assets

Part of a print by Japanese artist Kingei Marui

This post includes a table with the useful life of specified Intangible Assets that are recognised as being fixed assets subject to tax deductible amortisation under the Japanese tax code.

This category of intangible assets includes trademarks, patent rights Read More

Tax Based Retained Profits – Japanese “Earnings and Profit”?

A train departing from a Tokyo Metro platform

As noted in this post on Tax Based Capital, the Japanese tax system includes concepts similar to “outside basis” and “earnings and profits” found in the US tax code.  In the Japanese tax system Tax Based Retained Profits (in Japanese 利益積立金) are conceptually similar to US earnings and profits, although the detailed rules in the Japan tax system are of course very different. Read More

Tax Based Capital – Japanese “Outside Basis”?

Maiko, trainee gaisha, in Kyoto

This post looks at the Japanese tax concept of Tax Based Capital, or in Japanese 資本金等/shihonkintou.   The Japanese tax law seeks to tax shareholders on either income from their shareholdings or on capital gain or loss while simultaneously avoiding or mitigating the double taxation of corporate earnings. The concept of Tax Based Capital Read More

Dividend Taxation – Japanese companies’ capital account

The Mejiro or White Eye a charming Japanese native bird about the size of a sparrow

This post is the first in a series looking at how the return of funds to shareholders is treated for Japanese tax purposes.  Funds can be returned to a company’s shareholders through dividends, deemed dividends, share-buy backs, return of surplus on a liquidation and other transactions (below ‘Shareholder Distributions’).

In order to understand how Shareholder Distributions are taxed Read More

Definitions of Japanese tax, legal and other terms

A well known landmark in a passageway under Shinjuku Station

When interpreting tax matters it is critical to have a proper understanding of the terms used in Japanese legislation, accounting standards or similar technical documents. In order to help users of the Japan Tax Site get such an understanding the Site has developed a searchable database (the ‘Tax Definitions Database‘) of translations and explanations of Japanese technical terms Read More

M&A – allocating price to intangible assets

Entrance to a snow covered shrine in Hirotaka, Northern Japan

This post reviews principles behind allocating cost to intangible assets under Japanese purchase accounting for business combinations.

As part of Japan’s convergence with International Financial Reporting Standards (IFRS) Japanese  merger accounting (持分プーリング in Japanese, best translated as “pooling of interests”) is no longer available from 1 April 2010.  Also the Japanese Accounting Standards Board (‘JASB’) intends examining in Step 2 of its IFRS convergence process whether Japan’s current approach – amortisation of goodwill over a set period – should be brought closer to the IFRS approach (namely separately identifying intangible assets and goodwill and then periodically reviewing the value of such goodwill).  The JASBs request for public comment on accounting for business combinations is here and the related paper here. Read More

Japanese M&A accounting and IFRS convergence

A Buddha viewed past a screen covered with cursive Japanese script

This article includes a summary of the most recent changes to Japanese accounting standards relating to enterprise combinations which were proposed in 2008 as part of Japan’s IFRS convergence process and which came into force at for transactions from 1 April 2010 onwards (although earlier adoption was possible from 1 April 2009). Japanese accounting standards relating to business combinations including mergers and acquisitions, corporate splits and other corporate reorganisation transactions are also listed below. Read More