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Incorporation Expenses

When you set up a new company, you will pay some expenses like registration fee and opening costs. Who should bear such expenses, shareholder or a newly incorporated company?

Who will bear incorporation expenses?   

Since incorporating expenses are incurred before the company is legally incorporated, the shareholder have to pay registration tax to the authority and professional fees to the accounting firm, etc. And now you must be wondering who should bear such costs and how to treat those costs in accounts and tax return.
You may wish those costs to be reimbursed by the newly set-up company in terms of taxation at the shareholder level where such costs might be non-deductible.
Accounting standard and tax laws in Japan have specific guidelines about such incorporation expenses borne by newly established companies.

How do I treat incorporation expenses in accounts and tax return?

Accounting standard and tax laws apparently require different treatments.
The principal rule provided by the accounting standard (Japan GAAP PITF No. 19 Tentative Solution on Accounting for Deferred Assets) is that incorporation expenses borne by a newly established company shall be recognized as expenses in Profits and Loss at once. However, GAAP provides alternative treatment where you can opt to account as Deferred assets and depreciate it evenly within 5 years. 
On the contrary, the tax law insists you to recognize as Deferred assets, not expenses in P/L. However, you are allowed to depreciate as you like. You can depreciate how much you want at any time you want. You might want to save all the amount in Deferred assets until when the company unexpectedly gains big profits, which is not allowed in terms of accounting standard.
Practically, incorporation costs are charged as Deferred assets and depreciated at once. If you make losses for the first year, you can carry forward such losses over the next 9 years (From the fiscal year starting on or after April 1, 2018, you can carry forward over 10 years).
Please note that expenses relating to feasibility study are not included in incorporation expenses. Such costs should be treated as research expenses borne by shareholders seeking for new investment opportunities.

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