Dividend When arranging payments for dividends from unlisted companies in Japan, make sure you withhold 20% withholding income taxes. Always be sure to check with your tax accountant to see if tax treaty applies. Many treaties allow deduction or exemption for withholding income tax. Apart from tax treaty documents, there are cases when you need… [Read More]

Meeting Expense Meeting expense is one of the expenses challenged as entertainment expense subject to limitation as income tax deductibles. For meeting expense at coffee shops and restaurants, always have your sales personnel write down the following items on the back of the receipt to substantiate the business purpose. 1. A list of the attendees… [Read More]

Fringe Benefit Posting items under fridge benefits are target of withholding income tax adjustment. The tax auditors will be looking into transactions which can be defined as salary under the withholding income tax guidelines in Japan. This is one of the areas cultural aspects comes into play. Whether or not a transaction can be defined… [Read More]

Commisions (Transactions outside Japan) When making commission payments to non-Japanese entity or individuals overseas, you will need to ask the following questions regarding such commission. 1. Is the commission subject to withholding income tax? 2. Will it be subject to withholding for special reconstruction income tax? 3. Is the tax treaty applicable? In case of… [Read More]

Commisions (Outsourcing Fee) When engaging with an individual in a subcontractor agreement, careful attention needs to be provided considering withholding income tax obligations. The tax authority in Japan loves to challenge subcontractor engagement to full time employment. In case the subcontractor engagement does not qualify as such under the tax code in Japan, it will… [Read More]