Case Study: Japanese companies incorporating an overseas branch

A monochrome picture of Modern Japan that manages to capture some of the atmosphere of the pre war Showa period.

The Japanese tax rules related to the taxation of corporate reorganisations (discussed here) can be applied, with some modification and additional considerations, to transactions involving foreign companies.

The following article gives an example of their application to a relatively simple transaction, the incorporation of a foreign branch of a Japanese company.

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Foreign dividend exclusion and foreign companies

Japanese taiyaki - fish shaped batter surrounding a sweet bean center - suprisingly good

This post explains the scope of foreign companies to which the Japanese Foreign Dividend Exclusion System (FDES) applies, allowing Japanese companies to exclude the dividends of certain of their affiliated companies from Japanese taxation provided appropriate conditions are met. This post should be read in conjunction with the post discussing Qualifying Distributions that can apply the FDES system. Read More

Japanese Dividend Exclusion system – Qualifying Distributions

Osaka skyline by night

The Foreign Dividend Exclusion System (FDES), recently introduced as a major change to the Japanese tax law, allows certain distributions received by Japanese companies from overseas affiliated entities in which they have a 25% or greater interest (as defined) to be excluded from Japanese taxation. This posting discusses which types of distributions – ‘Qualifying Distributions’ – can apply the FDES system. Read More

Foreign Dividend Exclusion – glossary, definitions

Their convenience in crowded trains is one reason for the ubiquity of mobile phones in Japan

This post summarises some of the key Japanese terms relevant to the recently introduced system that allows Japanese companies to exclude certain foreign dividends (Qualifying Distributions, as explained in this post) received from affiliated companies (as defined) from Japanese taxation. Read More