1. Accounting (Source: “Accounting Standards Board of Japan (ASBJ)”)
In response to the December 2nd, 2011 proclamation of the Corporate Tax Reform Act, designed to adjust the tax rate of corporate income taxes and to secure financial resources for the recovery from the disaster of the Great Eastern Japan Earthquake, the ASBJ published the “Exposure Drafts of Tax Expense for Quarterly Financial Reporting due to Tax Reform 2011″ on December 23rd, 2011.
Under this reformed act, effective for accounting periods starting on and after April 1st, 2012, the corporate income tax rate applied to taxable income will be lowered from the current 30 % to 25.5%.
Furthermore, the special corporate income tax for post disaster rehabilitation, which is 10 % of the amount of the “base corporate tax” of each period, will be imposed on taxable income of companies in the accounting periods which start from April 1st 2012 to March 31st 2015.
Accordingly, in case of the companies whose accounting period ends at the end of March 2012, it is necessary to consider the collectability of the deferred tax assets with the renewed tax rate from the 3rd quarter.
2. Taxation (Source: “Kokusai Zeimu Magazine”)
Under the tax agreement between Japan and Hong Kong effective from August 2011, there are limited tax rates which will be newly applied to the withholding taxes withheld from January 1, 2012.
The table below provides an example of the limited tax rate applied to income from investment.
Regarding the income which is not withheld, this agreement is applied to the income of the period which starts on and after January 1, 2012.
・Dividends
a)Between parent and subsidiary companies 5%(10% or more)
(requirements of share holding rate)
b)Other 10%
・Interest
a)In case the beneficiary is a government Exempted
b)Other 10%
・Royalty 5%
3. This Week’s Words of Wisdom
“An army of sheep led by a lion would defeat an army of lions led by a sheep.”
(Arabic proverb)
It appears to me that the Governor of Osaka prefecture Mr. Hashimoto, who is currently in the middle of the merger of Osaka prefecture and Osaka city, is actually practicing the above proverb. Eventually, the existing political parties are mere paper tigers. It actually seems that there are few things today that are not paper tigers.