This article outlines how individuals are taxed on dividend income for Japanese tax purposes.
As so often seems the case with Japanese individual taxation, what would be expected to be a simple tax matter is made overly complicated by a range of expiring tax benefits (that are often revised or extended) Read More
This article outlines an anti-avoidance measure included in the 2010 tax reform that prevents a shareholder applying the Japanese Dividends Received Deduction (‘DRD’) on a Deemed Dividend arising on the purchase by a company of its own shares. Read More
In order to apply the Japanese Dividends Received Deduction (‘DRD’) a holding period requirement (the ‘Holding Criteria’) has to be met relating to the shares on which the dividend concerned is paid (below, relating to the ‘Shares’). The Holding Criteria is an anti-avoidance measure intended to prevent companies buying shares shortly before a dividend is due, Read More
This post gives an example of the calculation of the amount of a Deemed Dividend for Japanese DRD purposes in a merger. You can find at this post an explanation of the Deemed Dividends concept, including the basic formulae for their calculation. This post explains Tax Based Capital, which is an important concept Read More
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
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
As explained in this post introducing the Japanese Dividends Received Deduction (‘DRD’), Article 23-1 of the Japanese Corporate Tax Law recognises that, in order to mitigate double taxation of corporate profits, certain distributions to shareholders of corporate surplus Read More