Insights
NAViS TOPICS and QUICK REVIEWs include recent tax reforms as well as the most important stories in business, finance and accounting!
NAViS TOPICS:
Tax reform on Inheritance tax
Recent years have seen Japanese inheritance tax become severer as some of taxpayers have tried harder to escape from taxation. Some of them have even tried to emigrate to tax haven countries. Strict inheritance tax had a negative impact on foreign expatriates working in Japan.
Tax reform 2018 responding to BEPS project
Gift and inheritance tax reforms might be a disincentive to spouse visa
New brides and grooms married to Japanese partner are wondering if they should obtain a spouse visa or keep the current short-time resident permit. What makes them hesitate?
Opening a bank account
Although Japanese Government intended to double investment from overseas and relaxed the resident requirement for company’s directors, some banks still require the representative director to obtain a resident visa even he/she is not living in Japan.
QUICK REVIEW:
Comparative Research
Opening an office in Japan is the first step of a long-term commitment to the Japanese market. Firstly, you will conduct comparative research to decide whether to form a representative office, branch or company. Here is our quick review for you to make a comparison study.
Consumption Tax (VAT)
Consumption tax is a value-added tax (VAT), known in some countries as goods and services tax (GST). It applies to all goods and services that are bought and sold for the use in Japan. Therefore, goods exported to customers abroad are not subject to VAT, and those imported to customers in Japan are taxed.
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?
Withholding Tax
Under Japan domestic law, a payer may have a duty to withhold tax in relation to the payment of a specified nature. When to file and pay withholding tax?
Blue Return (tax benefit)
If a company keep double-entry records properly in its accounting book, the tax return of the company is treated as Blue Return and some tax benefits will be offered.
R&D Tax Incentives
The government made a fine tune on the powerful R&D incentives, which have been playing a significant role in attracting innovative foreign corporations.
Inheritance Tax
Did you know that decedent’s asset located in Japan is subject to inheritance tax even when both the successor and the decedent are foreign national and non-resident? If you inherit Japan stocks from the deceased, Japanese inheritance tax will be imposed regardless of the residency/nationality of the decedent or heir.
Corporate Income Tax
The government has been cutting the corporate tax rate to boost investment and wages while raising consumption tax rate. You can say the overall rate of income tax is around 30%, but details are more complicated.
Thin Capitalization Rules
How do you choose between debt and equity in the capital structure of your overseas subsidiary? Each has both benefits and drawbacks.
Earnings Stripping Rules
If the income tax rate in the jurisdiction of a subsidiary is much higher than its parent company’s, you may prefer a loan to equity finance from the perspective of tax because interest is tax deductible. One of the tax rules to prevent excessive tax avoidance behavior is earning stripping rules.
Dividends vs Director Fees
If you are doing business through a company, you must be always thinking about the most tax efficient way to get money back to your personal life. If you are both a shareholder and a director of the company, you may be wondering which way is less taxed, dividends or director fees.
