1) Group Taxation
As part of the revision of group taxation regime under the 2010 Tax Reform proposals, although no detailed definition is provided in the Proposal, the recognition of capital gain or loss arising from the transfer of certain assets between companies that have a direct or indirect 100 percent shareholding relationship will be deferred.
Currently, a company whose paid-in capital is 100 million yen or less is subject to special tax benefits applicable to SMEs such as reduction of corporation tax rate, preferable allowable rate for bad debt provisions, partial deduction of entertainment expense and refund by carry-back of tax losses.
Under the abovementioned proposal, a subsidiary or its second-generation subsidiary whose capital is 100% owned by a parent company will not be eligible for these benefits if the paid-in capital of the parent company exceeds 500 million yen.
To determine the eligibility for the benefits, the paid-in capital of their foreign parent company is required to be converted to Japanese yen using the rate at the end of the business year of the Japanese company.
No topics in this issue for accounting.
2. This Week’s Words of Wisdom (Source: “English words of wisdom to enrich life”)
“Deliberation is the work of many men. Action, of one alone.”
(Charles de Gaulle)
It has been said so long that almost all Japanese are critics; however it is really important to take action.
Democratic Party of Japan is now heavily criticized; however, it is meaningful to put new policy in practice. We, public should wait and see the outcome from their new policy in the long term except unclear treatment to Ichiro Ozawa.