Archive for October, 2010

The agent PE under Japanese domestic tax law

One of more than two hundred and fifty bars clustered into the Golden Gai area in Shinjuku. Usually there is only seating for a half dozen or so people.

Japanese domestic tax law and related Tax Instructions include detailed regulations addressing when a person in Japan acting as an agent on behalf of a foreign company can create a taxable presence – a permanent establishment or ‘PE’ – of the foreign company in Japan. Read More

Japanese tax preference zones?

October 27, 2010  |  News, Policy  |  No Comments

News, information

On 26 October 2010 the Nikkei Keizai Shimbun reported on proposals to introduce into Japan tax preference zones (in Japanese.’総合特区’ or ‘sougou tock’ translated below as ‘Comprehensive Special Zones’) that give preferential tax treatment to certain industries Read More

Corporate tax rate reduction and other 2011 tax proposals

October 26, 2010  |  Developments, News, Policy, Uncategorized  |  No Comments

News, information

On 26 and 25 October the Nikkei Keizai Shinbum reported on the status of a number of 2011 tax reform proposes following the most recent meeting of the Japanese Tax Commission (税制調査会 link in Japanese) on 25 October.  Key points of discussion included lowering the Japanese corporate tax rate Read More

Limitations to the deduction of Japanese partnership losses

October 25, 2010  |  Nin i Kumiai  |  No Comments

An attractive abstract picture of suckers on a boiled octopus, a healthy addition to the Japanese family table.

The Japanese tax law concerning Japanese civil law partnerships (in Japanese nin’i kumiai and below ‘NKs’) includes anti-avoidance provisions that can apply to deny the deduction of tax losses arising from an NK under circumstances where, generally speaking, the investment is passive and there are actual or substantive limits to the NK investor’s economic exposure to the underlying NK investments. Read More

Restatement of accounts and tax deductibility of expenses

October 23, 2010  |  Court, News  |  No Comments

Japanese judicial decisions

The Tokyo District Court (in Japanese commonly referred to as ‘東京地裁’) recently issued a decision in a case involving a plaintiff that had improperly capitalized costs into inventory in a prior financial year and then claimed a tax deduction for the write off of those costs in the subsequent financial year under appeal. Read More

2011 Japanese tax incentives targeting foreign investors?

October 22, 2010  |  Developments, News, Policy  |  No Comments

News, information

On Thursday 21 October 2010 the Nikkei Keizai Newspaper reported that the Japanese government was considering introducing preferential tax rates for foreign companies investing into Japan, lowering the corporation tax rate between 10 to 15 percentage points over a five year period. Read More

Accounting for Japanese civil law partnerships

October 16, 2010  |  Entities, Nin i Kumiai, Tax and Accounting  |  No Comments

Performing the 'Bon Odori' or 'Bon Festival Dance', a traditional element of the O-Bon Buddhist festival commemorated in Japan each August for over five hundred years.

This article discusses the basic Japanese accounting treatment of membership of Japanese civil law partnership, in Japanese a nin’i kumiai and below an NK.

An overview of the legal aspects of an NK arrangement can be found in this article, which also includes defined terms or abbreviations used here.

A description of the tax treatment can be found in this article.

Read More

Taxation of Japanese civil law partnerships

October 15, 2010  |  Entities, Nin i Kumiai  |  No Comments

A portrait of one whole-salers in Tokyo's Tsukiji fish market, near Ginza and the largest fish market in the world.

For Japanese tax purposes Japanese civil law partnerships (in Japanese nin’i kumiai, referred to below as ‘NK’s) are treated as fiscally transparent.

NKs themselves are not taxed as separate entities.  Instead, the members of the NK are subject to taxation on the income treated as attributable to them. Read More

Tax and short term visitors to Japan

October 6, 2010  |  Individual, Tax Treaties  |  No Comments

Tuna, in Japanese maguro, being examined in Tokyo's world famous fish market, Tsukiji.

Under Japanese domestic law where an individual who is not resident in Japan comes to work in the country he would normally be treated as earning Japan source income and hence have an obligation to file a Japanese tax return and pay Japanese tax.

A typical example of this situation may be a resident of Hong Kong Read More

Japanese taxes payable by a non-resident individual

October 5, 2010  |  Individual, Japan Source Rules  |  2 Comments
A ceremonial taiko drum from Hiyoshi Taisha shrine in Shiga prefecture.

A ceremonial taiko drum from Hiyoshi Taisha shrine in Shiga prefecture.

This article looks at the scope of Japanese taxation of non-resident individuals.  This topic is also likely to be of interest to individuals who are giving up their Japanese residence status, such as non-Japanese expatriate individuals who have lived and worked in Japan for a few years who are returning to their home country or Japanese expatriates going to work overseas. Read More