Advertising fees are generally paid in advance as prepaid expenses. In preparing consumption tax returns, timing of claiming as consumption tax receivables is at the time service is provided.
Advertising fees are highlighted in one aspect for income tax purposes. Japan tax code restricts income tax deductibles by deeming certain transactions as entertainment expense regardless of how is it is treated accounting wise. A guideline of advertising related fee being deemed as entertainment is determined by the characteristic of advertising. In case the expenditure of the advertising is targeted to a certain individual, the more likelihood the transaction will be deemed entertainment expense for tax purpose.In case it is targeted to mass audience ,it will not be deemed as entertainment.