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Corporate Tax Rates |
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The corporate tax rate for the first JPY 8 million in taxable income will be reduced from 22 percent to 18 percent for companies with a paid-in capital of JPY100 million or less.
This is a temporary measure effective for companies with fiscal years ending between April 1, 2009 and March 31, 2011. |
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Tax Loss Carryback Reinstatement |
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Effective for companies with fiscal years ending on or after February 1, 2009, the tax loss (i.e. net operating loss) carryback provision has been reinstated for companies meeting the following conditions: (1) filing under the blue tax return status and (2) with paid-in capital of JPY100 million or less. Qualifying small and medium sized companies can now carryback tax losses one year based on the following formula: |
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| 1. |
Excludes enterprise and inhabitance taxes. |
| 2. |
Current regulation only allows tax losses to be carried back one year |
| 3. |
Up to the amount of denominator |
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Tax Incentive Extensions |
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The provision in the Tax Reform that permitted small and medium sized companies4 engaged in the wholesale, retail and service businesses to claim additional first year depreciation of 30% or an investment tax credit equivalent to 7% of the acquisition cost for qualified machinery, equipment or furniture has been extended for another 2 years. This measure is applicable for acquisitions made through March 31, 2011. In addition, the Employee Training Tax Credits has also been extended for another 2 years. |
| 4. |
Small and medium sized companies are defined as companies with paid-in capital of JPY 100 million or less but excludes subsidiaries of large sized companies (entities with paid-in capital of more than JPY100 million) companies |
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Individual Contributions to Defined Contribution Pension Plans |
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The rules related to contributions to defined contribution pension plans for corporations have changed permitting individual employees to make matching contributions equivalent to those made by their corporate sponsors. The matching contributions made by the employees are also deductible as small-scale enterprise mutual aid payments on their individual income tax returns. |
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Inventory Valuation Methods |
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To achieve convergence with IFRS, the Accounting Standards Board of Japan (ASBJ) issued the "Accounting Standard for Measurement of Inventories" (Accounting Standards Board of Japan Statement No.9 (revised 2008)) on September 26, 2008. The revised standard removes the LIFO (last in, first out) method from the allowable inventory valuation methods under Japanese GAAP. To keep in line with the accounting standards changes, the 2009 Tax Reform includes revisions that eliminates LIFO and simple average method from the acceptable inventory valuation methods for income tax purposes. The effective date and details will be released at a later date. |
| J-GAAP |
CORPORATE TAXES |
| Accounting principles |
Revised ASBJ Stmt. No.9 |
Before amendment |
After amendment |
| LIFO |
[Abolished] |
LIFO |
[Abolished] |
| N/A |
N/A |
Simple average method |
[Abolished] |
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Pre-filing Notifications for Directors' Bonuses |
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Certain information formally included in the notification form, specifically "the compensation (salary and bonus) paid to the director for the previous year" and "the compensation (salary and bonus) paid to other directors," will no longer be required in the new form. This should ease some of the administrative burden on taxpayers. |
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