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]
Travel
Travel With the spread of IC cards in Japan, we have seen many cases where employees tries to get away by submitting charging invoice of IC cards for expense reimbursements. Please keep in mind that these will not satisfy the eyes of the tax auditor in Japan for most cases during tax audit. Major reason… [Read More]
Social Security Contributions
Social Security Contributions We see many foreign companies in Japan accrue social security contribution on a monthly basis. But on the contrary, social insurance office provides contribution statement after service is provided. Which means invoice for social security is always 1 month behind. Due to such cultural unique situation in Japan, many companies, unless public,… [Read More]
Service Sales
Service Sales If you are in a service industry and provide service for a period over 1 month, you are in for a challenge. Managing the following items will be critical not to be target of in depth tax audits. 1. Service Contract 2. Proof of dates service was provided 3. Invoice 4. Collection of… [Read More]
Repair Expense
Repair Expense Repair expenses can be little tricky in Japan. The tax code in Japan defines repair expenses which can be deductible at once as expenses for maintaining the current function of equipment or device. In other words, if the repair expense is something which is to upgrade the function or extending duration of use,… [Read More]
Product Sales
Product Sales Sales of commercial products are recognized at the time of sales. But depending on the industry and company, point of sales differs. In general, point of sales can be categorized into the following, 1. Contract Signed Date 2. Shipping Date 3. Delivery Date 4. Receipt Inspection Date 5. Date of Usage In principle,… [Read More]
Office Supplies
Office Supplies With advancement of technology, many office devices had become affordable. Purchase price has gone down so that many devices are not subject to depreciation. The tax code in Japan allows a one-time expense write off for devices which unit price is below JPY 100,000. The key here will be the unit price. Ask… [Read More]
Meeting Expense
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
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]
Entertainment
Entertainment Majority of entertainment expenses may be considered deductible for most countries but in Japan, it is limited. The tax code has been put in place to regulate companies claiming entertainment expenses which in reality are personal expense of individuals made on company accounts. In general, entertainment expenses are not considered deductible unless you are… [Read More]