Nagamine & Mishima Consulting

Accounting practice since 1989

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Directors’ compensation

Directors’ compensation

Directors’ compensation may be considered deductible for most countries, but in Japan, it is limited. In Japan, directors’ compensation has been considered to be a handy method to manipulate financial results from the view of the tax authorities and therefore, there are certain rules for directors’ compensation to be deductible under Japan tax code.

In many cases, directors’ compensation is comprised of fixed portion and variable portion which is generally determined based on the result during the year stated in the contract with the company. However, variable portion based on the result is generally non-deductible and certain action should be taken for that variable portion to be deductible. To avoid the situation of directors’ compensation already accounted for is not deductible, careful attention should be paid from the time when deciding the ratio of fixed and variable portion of the compensation in the contract when assigning a director for the company in Japan.

Also,providing housing and supporting living expenses as fringe benefit can also be considered as director’s compensation in some conditions

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People are Talking

  • “I had the privilege of working with Nagamine and Mishima over the last 1 year and has been most impressed with their level of professionalism and standards.  They always provide us with good advise on the local accounting requirements and standard.  Also they are always on time in their accounting report submission and have always met our needs for adhoc requests.  This arrangements best suit our needs and allow us not to invest in our own accounting headcounts as we have an accounting partner that meet our needs fully.”

    Chia Sin Jin, Finance Director

    Unity Technologies