Tax Law - Japan Compliance

Japan Compliance

Tax Law

A collection of 6 posts

Slide mapping Japan’s Pillar Two rollout: 15 % global minimum tax timeline, IIR calculation flow, CbCR safe-harbor tests and compliance checklist for MNEs.

Japan Embraces Pillar Two: Understanding the New Global Minimum Tax Rules and Their Impact on Multinationals

TL;DR * Japan implements the OECD Pillar Two 15 % global minimum tax from fiscal years starting 1 Apr 2024 via a stand-alone Income Inclusion Rule (IIR). * Top-up tax applies to MNE groups with €750 m+ revenue; Japan follows OECD GloBE mechanics, offers CbCR safe harbors through 2026, and will add

Slide summarising Japan’s “unreasonably high” executive-pay rules: dual tests, 2023 Tokyo case, benchmarking methods and compliance checklist for US subsidiaries.

Executive Pay in Japan: Avoiding “Unreasonably High” Compensation Pitfalls under the Corporation Tax Act

TL;DR * Japan’s Corporation Tax Act allows deductions for executive pay only if the amount is not “unreasonably high.” * Article 70 of the Enforcement Order applies dual tests: substantive benchmarking vs. formal limits. * Courts (Tokyo 2023, Supreme Court 1997) uphold the rule; thorough benchmarking, board approvals and documentation are

Slide mapping Japan’s international tax risks: PE thresholds, TP documentation, CFC inclusion tests, Pillar Two top-up tax timeline and mitigation checklist.

International Tax Risks in Japan: PE, Transfer Pricing, CFC & Pillar Two Guide for US Companies

TL;DR * Japan poses four headline risks for US multinationals: Permanent Establishment, Transfer Pricing, CFC rules and BEPS Pillar Two top-up taxes. * Mis-steps can push effective tax rates above 35 % or trigger double taxation. * Careful structuring, robust TP documentation and early modelling of Pillar Two exposures are essential. Table of

Slide summarising Japan’s Wage Increase Promotion Tax Credit: thresholds, bonus add-ons and FY 2024-26 carry-forward rules.

Japan’s Wage Increase Promotion Tax Credit (Chin’age Sokushin Zeisei): FY 2024-26 Incentives & Compliance Guide

TL;DR * Japan rewards companies that boost payroll with a tax credit up to 45 % (SMEs) under the Wage Increase Promotion Tax System. * The FY 2024-26 reform adds higher rates, size-based tiers and a 5-year carry-forward for SMEs. * Accurate payroll data, certification for training / diversity, and a public multi-stakeholder policy

Slide summary: Japan’s digital-platform tax—scope, 100 m turnover threshold, invoicing duties, penalties, Oct 2024 start

Taxing the Digital Economy: Japan's New Rules for Platform Taxation

TL;DR: From October 2024 Japan deems large digital-platform operators the supplier for cross-border digital services, making them responsible for collecting and paying consumption tax. The new “specified platform” regime brings stricter registration, invoice and annual-report duties—foreign marketplaces must re-tool billing systems and audit seller data now. Table of

Slide summary: Taishokukin—legal nature, tax benefits, limits on forfeiture, and employer considerations

Labor & Employment Law

Retirement Allowances (Taishokukin) in Japan: Legal Nature, Tax Implications, and Restrictions on Forfeiture

TL;DR: Taishokukin, Japan’s lump-sum retirement allowance, is a hybrid of deferred wages, merit reward, and livelihood security. Courts strictly limit forfeiture, while generous tax rules reward long-tenure lump sums—yet reform debates question their fit for a mobile labor market. Table of Contents 1. What is Taishokukin? Legal