On 2 November 2010 the Nikkei Keizai Shimbun reported on a 2011 tax reform proposal to extend the period allowed for tax payers to resubmit tax returns that request a repayment of tax.
The Nikkei article explained that at present a taxpayer is allowed one year from the due date of the original tax return submission to resubmit a revised return claiming a tax repayment. In contrast to this position, the tax authorities have between a three and seven year time limit to issue a tax assessment imposing additional taxation. The apparent unfairness arising from the asymmetry in this position had been increasingly noted.
One proposal under consideration includes increasing the time limit to submit a revised return including a repayment to a five year period, the same period allowed to submit a revised return increasing the amount of taxes payable. An alternative proposal was reducing to three years the time limit for re-filing a tax return for both increases and decreases in the amount of tax payable.
The Nikkei article also noted that the authorities were considering introducing a special legislative measure allowing individuals who had been subject to double taxation (inheritance tax and income tax) on pension style insurance contracts to reclaim taxes back to the year 2000.
The one year time limit allowed to re-file a tax repayment claim has often been problematic for foreign investors as well as, no doubt, for local Japanese companies.
This one year period allowed limited additional time to identify and correct errors. As an example of perceived unfairness, if a company succeeded in negotiating a uni-lateral APA that allowed repayment of taxes for a period more than one year prior to the conclusion of negotiation a repayment claim could not be made even if due for such an earlier period under the finally agreed uni-lateral APA.