Archive for March, 2010

Thin capitalisation – tax filing schedule

Light summer kimono's - Yukata in Japanese

Attached here is the form required in a Japanese tax return that is used to calculate the leverage ratios required for thin capitalisation purposes (see this post for details) and hence any disallowance of interest for Japanese thin capitalisation purposes.

The form has been annotated in English to show the information required to complete the calculations required for Japanese thin capitalisation purposes.

The original form can be found here on the NTA website. Of course, proper professional advice should be sought before completing the form for real.

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

Cases re Japan CFC – nature of main business

March 25, 2010  |  Japanese CFC  |  No Comments

A lego interpretation of Himeji-jou - a world heritage site

This post is the first of a series which outlines precedents arising from a number of tax cases that have been heard in the Japanese courts concerning the application of the Japanese tax haven countermeasures law (THCML). These cases provide some useful guidance on the interpretation of the law concerned, but of course proper professional advice should be obtained about their application to a particular taxpayer’s specific circumstances.

The first case addresses the definition of main business for a financial year and also considers what factors are relevant to determining main business. 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.

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2010 Tax Reform and Japan CFCs

March 24, 2010  |  Japanese CFC  |  No Comments

Japanese 2010 tax reform and Japanese CFC taxation.

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Interest withholding tax rates under Japan’s treaties

March 22, 2010  |  Tax Treaties, Withholding tax  |  No Comments

Rates of withholding tax on interest under Japan's tax treaties.

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Japan source income – Basics – Articles 138 and 161

A rare remaining row of period houses in Kyoto

The source of income is a critical concept for international tax purposes given it will usually define the extent to which a particular country taxes the income of foreign persons. A foreign company which has Japanese source income as defined under Japan’s domestic law may be subject to Japanese tax Read More

Flowchart to determine Japanese CFC status

March 19, 2010  |  Japanese CFC  |  No Comments

Flow chart to work out a subsidiary's status under the Japanese CFC rules.

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