The Japanese general tax anti-avoidance rule

September 20, 2010  |  basics, Latest  |  No Comments

Lanterns in the shrine of Kasuga Taisha, in Nara central Japan.

Japan has a very broad general tax anti-avoidance rule that can be applied to certain defined classes of company (referred to below as ‘Anti-Avoidance Rule Companies’ or ‘AAR Cos’).  This is Article 132 of the Japanese Corporation Tax Law.

The scope of the companies to whom this rule can apply Read More

Japanese entities – pass-through or taxable as corporations

September 10, 2010  |  basics  |  No Comments
Venn diagram showing tax status of Japanese entities

Venn diagram showing tax status of Japanese entities

Recent years have seen a significant expansion in the types of trusts, partnerships and corporations that can be formed in Japan.

Understanding which entities are pass-through for tax purposes, which entities are taxed as corporations 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

Special relationship to an individual

August 30, 2010  |  basics  |  No Comments

Diagram of family relationship under the Japanese Civil Code

This article explains the definition of ‘Special Relationship’ (特殊の関係) for Japanese tax purposes as applied to individuals.  This definition is used in different contexts in the Japanese tax law, for example as part of the process of determining whether or not a company is Family Company for Japanese tax purposes. Read More

Group relationships in Japanese tax

August 11, 2010  |  basics, Group Taxation  |  No Comments

Group relationships for Japanese tax purposes


The diagram to the right in this post outlines two group relationships defined for Japanese corporate tax purposes. These are the Japanese Consolidated Tax group, that allows offset of losses within the Japanese group, and the IGTS group, that allows the transfer if assets between Japanese corporate members of the group without giving rise to gain or loss. Read More

Tax Controversy – Panasonic taxed on “donation” to Chinese subsidiary

August 4, 2010  |  basics, Developments, Financing, News  |  No Comments

News, information

The Asahi Newspaper reported on 2 August 2010 that the major household electronics manufacturer Panasonic had been subject to an assessment for JPY22Bn Read More

Dividends and Attributable Interest

Wagashi traditional Japanese sweets often reflecting the seasons

The Japanese Dividends Received Deduction (‘DRD’) helps mitigate the double taxation a company would otherwise suffer through tax on dividends the company receives from other Japanese companies.  However the DRD regulations also include provisions that effectively disallow financing costs that are attributable to dividends to which the DRD is applied.  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

Japan 2010 tax reform – deferral of tax on intra group transactions

June 22, 2010  |  basics, Business combinations  |  No Comments

Pine trees are typically planted at the gate to large shrines.

This post outlines the rules introduced in the Japanese 2010 tax reform that allow sales of certain assets to be made between defined Japanese entities within a group of wholly owned companies without immediately recognizing taxable gain or loss.  This system is referred to in Japanese as the グループ内取引等に関する税制・guruupu nai torihiki tou ni kansuru zeisei, translated below as the ‘Intra Group Transactions Tax System’ abbreviated as IGTS.  The system should apply to transactions from 1 October 2010 onwards but professional advice from qualified Japanese tax professionals must be taken to confirm how the system can be applied. Read More

Japanese corporation tax – basic FAQs

March 24, 2010  |  basics, Corporate tax administration  |  No Comments

'Wagashi' - Japanese sweets traditionally used in the tea ceremony

This article has a selection of FAQs around basic Japanese corporate taxation together with links to more detailed articles for each topic discussed.

Please do not hesitate to add comments or further questions as these can form the basis of further FAQ items in due course.

Read More