Taxpayer victory over blue form revocation

August 1, 2011  |  Court, News  |  No Comments

Japanese judicial decisions

On 1 December, 2010 the Tokyo Tax Tribunal found in favor of an individual taxpayer who had protested against the revocation of their “blue form” filing status following an audit. Read More

Case Study: Japanese companies incorporating an overseas branch

A monochrome picture of Modern Japan that manages to capture some of the atmosphere of the pre war Showa period.

The Japanese tax rules related to the taxation of corporate reorganisations (discussed here) can be applied, with some modification and additional considerations, to transactions involving foreign companies.

The following article gives an example of their application to a relatively simple transaction, the incorporation of a foreign branch of a Japanese company.

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Tax avoidance and the Takefuji case

March 1, 2011  |  Court, News  |  No Comments

Japanese judicial decisions

On 18th February 2011 the Japanese Supreme Court handed down a decision in favor of the heir of the Japanese consumer finance company, Takefuji, in a case relating to individual tax residence for Japanese tax purposes.. Read More

Priority in Japanese transfer pricing methodologies

February 28, 2011  |  Transfer Pricing  |  No Comments

Flowchart showing priority among Japan's transfer pricing methodologies pre 2011 tax reform.

Japan’s 2011 tax reform proposals include the abolition of priority among the different approaches allowed under the transfer pricing regulations to price controlled transactions (‘TP Methodologies’). The proposals are intended to be effective from 1 October 2011 if passed by the Japanese Diet in early 2011.

This article introduces a flow chart outlining the priority in which different TP Methodologies should be applied. Read More

Transfer pricing and Japanese 2011 tax reform

February 28, 2011  |  Transfer Pricing  |  No Comments

An artfully composed photograph of recently planted rice fields in rural Japan.

The outline of 2011 Japanese tax reform proposals (link in Japanese) issued on the 16th of December 2010 include a number of technical changes to the Japanese transfer pricing regulations that have important practical implications for transfer pricing practice in Japan. This article summarizes those proposed changes.

The transfer pricing section of the 2011 tax reform proposals starts by noting that proposed changes to the transfer pricing regulations Read More

Japanese tax litigation: Takefuji, hostesses and the ‘Rule of Law’

February 25, 2011  |  Court, News  |  No Comments

News, information

On the 19 February the Japanese Nikkei Newspaper published an article commenting on recent trends in Japanese tax litigation.  The article outlined a number of high profile cases that the Japanese tax authorities had lost in recent months Read More

Passage of 2011 tax incentives for foreign companies progresses

February 22, 2011  |  Developments, News  |  No Comments

News, information

On the 11th February the Asahi Newspaper reported on the progress of 2011 tax reform proposals introducing tax preferences for certain foreign groups establishing subsidiaries in Japan (below the ‘Asian Base Promotion’ proposals and in Japanese the ‘アジア拠点化推進法案’ or ‘ajia kyotenka suishin houan’). Read More

Case study: Thin cap – matters equivalent to a guarantee

February 10, 2011  |  Thin Capitalisation  |  No Comments

A sculpture from the Sapporo snow festival. Hokkaido, Japan's northernmost island of which Sapporo is the capital, remains home to a high concentration of wild bears.

The following case study considers whether or not a transaction that does not have the legal form of a guarantee may still be treated as, in substance, being a guarantee from a Foreign Controlling Shareholder for the purposes of the Japanese thin capitalisation regulations.

This section should be read in conjunction with the articles on the Japanese thin capitalisation regulations which can be found here.

Capitalised terms below are as defined in the thin capitalisation section.

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Case study: Thin cap and stock borrowing

February 9, 2011  |  Thin Capitalisation  |  No Comments

A rainy night in Shinjuku, probably taken on the streets of Kabukicho, one of the liveliest districts in town.

The following article is a case study looking at the application of the Japanese thin capitalisation regulations to a stock borrowing transaction.

This article should be read in conjunction with the articles outlining Japanese thin capitalisation regulations which can be found here.

Terms in capitals are as defined in the thin capitalisation articles unless otherwise explained below.

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Shareholder and creditor protection in Japanese mergers

The eves of 'Kinkakuji' or the 'Temple of the Golden Pavillion' in Kyoto, rebuilt after its destruction through arson by a Buddhist acolyte in 1950 as described in the book by Yukio Mishima of the same name.

The Japanese Corporate Law (‘JCL’) includes measures allowing creditors or shareholders of the Ceasing or Surviving Companies in a Japanese merger to object to the merger along with mechanisms allowing the companies involved to resolve such objections.  This article describes these measures in more detail.

Procedures for the protection of creditors

Under JCL articles 789-2 and 799-2 the Ceasing and Surviving Companies of a merger are required to Read More