Japanese trusts in real estate transactions

November 20, 2010  |  Real Estate, Trusts  |  No Comments

Osaka real estate in need of some redevelopment.

In Japanese real estate transactions rather than owning real estate directly, it is common for a real estate special purpose company (‘SPC’) to own a real estate trust beneficiary certificate (referred to below as a ‘Trust Certificate’) which evidences ownership of an interest in a trust whose underlying asset is Japanese real estate. Read More

Proof of payment of Japanese corporate tax

September 4, 2010  |  basics, Domestic  |  No Comments

Receipt evidencing Japanese tax payment

One seemingly trivial issue which can have great practical importance is obtaining proof that a Japanese company has paid its corporation tax liability.

Evidence of such tax payment is often critical for foreign tax credit purposes or for due diligence purposes. Below is an outline of the Japanese tax payment process with examples in English Read More

Donations to foreign related parties

August 15, 2010  |  Domestic, Transfer Pricing  |  No Comments

Shishi odoshi, often seen in Japanese temples or traditional gardens

This article examines an issue that often arises during the course of a corporate tax audit of the Japanese subsidiary of a foreign multinational.  During such an audit the auditors may assert that a Japanese company’s transaction with its Foreign Related Party (‘FRP’) is a “Donation” for Japanese tax purposes (as defined below) Read More

Dividends and short term share holdings

July 28, 2010  |  Dividend Taxation, Domestic  |  No Comments

Center Gai, a main shopping street in Shibuya

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

Deemed dividends – concept, transactions

July 19, 2010  |  Dividend Taxation, Domestic, Featured  |  No Comments

Mount Fuji from the air, of course.

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

The Japanese Dividends Received Deduction

Banners from Jonangu Shrine in Kyoto. http://www.jonangu.com/

This post is the first in a series looking at Article 23 of the Japanese Corporate Tax Law which is the main article dealing with the Japanese Dividends Received Deduction (‘DRD’).  In particular this post addresses paragraph 1 in Article 23 which defines which types of payment by a company or other entities to its members or shareholders are eligible for the DRD  (i.e. which payments are ‘DRD Dividends’). Read More

Japanese trust taxation – introduction

June 15, 2010  |  Transactions, Trusts  |  No Comments

A picture of five geisha taken in the Meiji era

This post is an introduction to the taxation of Japanese trusts.  Japanese trust taxation is a confusing area because of the large number of different trust forms which have a range of similar sounding names.  An understanding of Japanese trusts and their taxation is, however, useful when understanding many of the different financial products available in the Japanese market and their treatment for Japanese individual tax purposes.  Furthermore, transactions involving the use of trusts created for securitisation or similar financing purposes are gaining in popularity in the Japanese capital markets.  Examples include the  March 2010 Mitsubish Sumitomo Bank loan securitisation or Softbank’s  use of trusts in whole business securitisations .  This is a promising area for the future. Read More