Retained Earnings Carried Forward
If you have invested in Japan and are thinking about dividends, you will need to monitor Retained Earnings Carried Forward for your Japan investment. Under the Japan Company Act, a company is required to reserve 10% of gross amount of dividends. In order words, a company can provide dividends up to 10/11 of the Retained Earnings. Please note that in principle, a company has obligations to withhold 20% of the gross dividends and make payments to the tax office the following month on the 10th day. Tax treaty on withholding on dividends differs from country to country so consult with your tax accountant on scenario planning for dividend arrangements.