Archive for July, 2010

Tax Controversy – Daiei taxed on forgiveness of debt to subsidiaries

July 31, 2010  |  Corporate Recovery, Developments, News  |  No Comments

News, information

Japanese retailer Daiei was assessed JPY25Bn (USD294m @85) for understating taxable income for four years.  The Asahi newspaper reported as follows: 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 – calculation

July 28, 2010  |  Dividend Taxation  |  No Comments

Sapporo station in the snow, Hokkaido

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

Expected useful lives of intangible assets

Part of a print by Japanese artist Kingei Marui

This post includes a table with the useful life of specified Intangible Assets that are recognised as being fixed assets subject to tax deductible amortisation under the Japanese tax code.

This category of intangible assets includes trademarks, patent rights Read More

Introduction to Japanese intangible assets

July 24, 2010  |  Intangible Assets  |  No Comments

A picture by Japanese artist Kingei Marui

This post is an introduction to the Japanese taxation of intangible assets (‘IA’s) and a more detailed review of one particular class of Japanese IA called “Deferred Assets”, or in Japanese 繰延資産/kurinobe shisan. Follow up posts will look at other areas of Japanese intangible asset taxation and please also see this post on accounting recognition of intangibles in acquisitions.

Read More

Tax Based Retained Profits – Japanese “Earnings and Profit”?

A train departing from a Tokyo Metro platform

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

Tax Based Capital – Japanese “Outside Basis”?

Maiko, trainee gaisha, in Kyoto

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

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

Individual tax – calculating taxable income

July 18, 2010  |  Individual  |  No Comments

A fan with the letters in the Japanese cursive hiragana script just visible

The early focus of this site is corporate and international tax issues. However for the benefit of expat using this site we will be posting on tax topics that may be of interest to non-Japanese citizens resident in Japan.

Below is an overview of the process behind filing a Japanese individual tax return along with a helpful diagram illustrating this process. Read More

The Japanese Dividends Received Deduction

Banners from Jonangu Shrine in Kyoto.

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