Amount of capital may be the most important figure when you consider tax in Japan. Why? It is because many measures in the tax code define the operation of a company by capital not by amount of sales. When you consider increasing capital amount, the timing will affect your tax position. So close communication with the tax accountant will benefit you in the long run and avoid you from unexpected tax circumstances. Some notable tax area concerning amount of capital are as follows,
1. Corporate Income Tax Rate
2. Scope of Inhabitant Tax
3. Allowance for bad Debt
4. Deductible Entertainment Expenses
5. Deductible Donations
The date of capital increase or decrease will be decided based on company registration. Therefore, you will need to plan ahead considering the administrative procedures required. In addition, you will need to submit notification documents for changes in capital amount to the national tax office as well as the local tax offices.