Japanese CFCs – diagrams

July 16, 2010  |  Japanese CFC

One of many small shops in Tokyo's Akihabara selling computer parts.

This post introduces three diagrams intended to help understand how to determine whether a foreign entity is a Foreign Related Party for THCML, how to determine direct and indirect ownership percentages in different circumstances and also how to calculate the Ownership Ratio used to apply Current Taxation to Japanese resident companies or individuals in relation to income from Specified Foreign Subsidiaries.

Foreign Related Company determination

This diagram gives an example of how to determine whether a foreign company is a Foreign Related Party for THCML purposes.

Calculation of direct and indirect holding

This diagram illustrates how to calculate the Ownership Ratio for direct and indirect holdings of shares in a Foreign Related Company.

Ownership Ratio

This diagram illustrates who will be liable to tax and how to calculate the Ownership Ratio on which Japanese residents will be subject to Current Taxation under the THCML for a Specified Foreign Subsidiary.


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