CHAPTER II INCOME TAX (INDIVIDUAL INCOME TAX) General

Transcription

1 CHAPTER II INCOME TAX (INDIVIDUAL INCOME TAX) General Characteristics of Japan s Income Tax a. b. c. d. e. f.

2 g. Taxpayers Taxpayers and Taxable Income a. Resident Taxpayer

3 b. Nonresident Taxpayer c. Corporation *

4 2. Rules for Income Attribution a. Principle of Attribution of Income to an Actual Beneficiary * b. Attribution of Profits from Trust Property

5 Calculation of the Tax Base Principles of Taxable Income Calculation a. b. c. d. e. f.

6 g. Categories of Income and Method of Calculation

7 Categories of Income and Method of Calculation (Continued) \ \ \ \ \ \ \ \ \\ \ \ \ \ \ \\

8 Categories of Income and Method of Calculation (Continued) \ \

9 Categories of Income and Method of Calculation (Continued) \ \ \ \ \ \ \ \ \ \

10 Calculation of Business Income a. Calculation of Gross Receipts b. Calculation of Necessary Expenses \

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13 c. Special Deduction for Filing a Blue Return \

14 \ d. Separate Taxation of Business Income and the like regarding Land and other Holdings of Real Estate Dealers and the like. Special Tax Treatment of Employment Income Deduction for employees specific expenses 5. Special Tax Treatment of Timber Income a. Estimated Deduction from Timber Income b. Special Deduction for Timber Income from Forest Programs

15 Special Tax Treatment of Capital Gains a. Acquisition Cost b. Recognition of Capital Gains Based on Market Value c. Exchange of Land, Buildings, etc.

16 Special Tax Treatment of Capital Gains from the Transfer of Land, Building or Right to Use Land (d. - k.) d. Special Tax Treatment of Capital Gains Derived from Transfer of Land, Buildings, or Right to Use Land: Principle \ \ \\ \ \ \\ \

17 e. Special Tax Treatment of Capital Gains Derived from Expropriated Property etc. \ \ \ f. Special Tax Treatment of Capital Gains for Specific Public Projects \

18 \ \ g. Special Tax Treatment for Capital Gains on Residential Property \

19 h. Special Tax Treatment for the Replacement of Business Asset

20 i. Special Tax Treatment for Replacement of Lands used for the Construction of Mid-rise and High-rise Fireproof Buildings j. Special Tax Treatment for the Acquisition of Land through an Exchange Arranged by the Agriculture and Residence Association k. Special Tax Treatment for Exchange of Land in Large-scale Housing and Land Development Projects l. Special Tax Treatment of Capital Gains Derived from the Transfer of Securities

21 \ m. Other Forms of Special Tax Treatment

22 Special Tax Treatment of Miscellaneous Income, etc. Nontaxable Income [Items to apply to the elderly (65years old and older), single parent households, and the physically handicapped. However, after being covered by certain interim measures, incomes of the elderly will be excluded as of December31, 2005from the objects of tax exemption.] \ \

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25 Aggregation of Income and Treatment of Profits and Losses

26 Carryover of Losses a. Taxpayers Filing a White Return b. Taxpayers Filing Blue Returns \

27 Carryback of Net Losses Deductions and Exemptions 1. Deduction for Casualty Losses \ Deduction for Medical Expenses \

28 \ Deduction for Social Insurance Premiums Deduction for Small-scale Enterprise Mutual Aid Premiums, etc. Deduction for Life Insurance Premiums \ \ \ \ \ \ \ \ \ \

29 \ \ \ \ \ \ \ \ Deduction for Casualty Insurance Premiums \ \ \ \ \ \ \ \ Deduction for Contributions or Donations \ \ \ \ \ Exemption for the Handicapped \ \

30 Exemption for Widows, Widowers, or Working Students \ \ \\ \ Exemption for Spouses \ a. \ b. \ \ Special Exemption for Spouses \ \ \ \ \ \ \\\

31 Exemption for Dependents a. \ b. \ c. \ \ \

32 Basic Exemption \ Calculation of Tax Amounts Tax Rates Individual Income Tax Rates \ \ \ \ \ \ \ \ \ \ \\ \\ Averaging Taxation on Timber Income

33 Averaging Taxation on Fluctuating and Extraordinary Income Tax Credits a. Credit for Dividends \ \ \

34 \ b. Credit for Foreign Taxes c. Credit for Housing Loans

35 \ \ \ \ \ \ \ \ \ \ \ \ \ \ Proportional Tax Credit \ \ \ \ \ \ \

36 \\ General Payment of Income Tax Keeping Proper Records \

37 Estimated Payment \ Final Returns

38 \ \ \ \ Assessment in the Event of Failure to File Correct Returns Blue Returns General

39 Approval by the Director of the Tax Office Privileges a. b. c. d. e. f. \

40 g. \ General Withholding Income Tax at the Source * Interest and Dividend Income Income from Original Issue Discounts on Debentures

41 Employment Income a. Ordinary Salaries

42 Excerpts from Monthly Tables (Column A) \ \ \

43 \ b. Bonuses \ \ \ Excerpts from Rate Tables (Column A)

44 \ \\ c. Year-end Adjustment Retirement Income Miscellaneous Income from Public Annuities \ \

45 \ \ \ Remunerations, Fees, etc. a. \

46 b. \ \ \ \ \ \ \

47 Quasi-Financial Products Others a. \ b. Inquiries and Examinations for Taxpayers and Information Returns Inquiries and Examinations Payment Records

48 a. Payment Records for Interest \ \\ \ b. Payment Records for Dividends \ \ \ \ c. Notice of Receipt

49 d. Records for Withholding \ e. Payment Records for Remunerations, Fees, etc.

50 CHAPTER III CORPORATION TAX (CORPORATE INCOME TAX) General Characteristics of the Japanese Corporation Tax a. b. c. d.

51 e. \ \ f. g. h.

52 Special Taxation Measures

53 Tax Measures Concerning Corporate Reorganization Including Corporate Division, Consolidation, etc. <Outline> 1. Taxation on Corporations 2. Taxation on Shareholders 3. Handling of Reserves, etc.

54 4. Preventive Measures against Tax Avoidance 5. Others

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59 Trial Calculation of Loss in Revenue as an Effect of Special Taxation Measures for Corporation

60 1. Scope of Taxpayers Taxpayers a. Taxable Corporation

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62 b. Nontaxable Corporation Rules for Income Attribution a. Principle of Attribution of Income to an Actual Beneficiary b. Taxation of a Trust Taxable Income Principle of Calculation of Taxable Income

63 Items Excluded from Gross Revenue or Gross Expenses in Calculation of Taxable Income a. Items to be Excluded from Revenue for Tax Purposes : b. Items to be Excluded from Expenses for Tax Purposes

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65 Valuation of Inventories a. Selection of the Method of Valuation b. Report of Valuation Method c. Acquisition Cost of Inventories \ \

66 Depreciation Allowance a. Calculation of Depreciation Allowance \ \ \ b. Methods for Calculating Depreciation (excluding deferred assets)

67 c. Report on Depreciation Methods (excluding deferred assets) d. Statutory Useful Life and its Adjustment Measure e. Residual Value (as an Allowable Limit for Depreciation)

68 f. Treatment of Inadequate or Excessive Depreciation

69 Sample of Statutory Useful Lives of depreciation Assets

70 g. Acquisition Cost of Fixed Assets Advanced Depreciation Tax-Free Reserves a. Reserve for Bad Debts

71 b. Reserve for Loss on Returned Goods Profit or Loss from the Transfer of Securities and their Term-end Assessment a. Profit or Loss from the transfer of securities b. Term-end assessment of securities and their appraised profit and loss

72 c. Profit or loss from derivatives transactions d. Profit or loss on effecting hedges e. Conversion of foreign-denominated transactions

73 Special Rule for the Recognition of Specific Profits and Expenses a. Special Accounting Methods Regarding Profits and Expenses of Installment Sales, etc. b. Special Accounting Methods Regarding Profits and Expenses of Long-term Construction. *

74 3/4 Calculation of Tax Amounts Methods of Tax Calculation a. Corporation Tax on Income for Each Accounting Period b. Corporation Tax on Liquidation Income Tax Rates a. Tax Rates for Ordinary Income \ \ \ \ b. Tax Rate for Retirement Pension Funds c. Tax Rates for Liquidation Income

75 Tax Credits a. Income Tax Credits b. Credit for Foreign Taxes

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79 Carryover and Carryback of Losses Taxation of retention money on Family Corporations \ \\\\

80 Special Additional Tax on Retirement Pension Funds of Trust Companies, Life Insurance Companies, etc. Returns Payment, and Refunds of Corporation Tax Final Returns

81 Interim Returns \ Refunds Blue Returns

82 The Blue Return System Privileges for Corporations Filing a Blue Return a. b. c. d. e. f. g. Approval by the Director of the Tax Office

83 Correction and Determination Assessment in the Event of Failure to File Correct Returns Credit of Overpayment of Tax due to Disguised Accounting Prohibition of Improper Transaction by a Family Corporation Special Taxation Measures Special tax credit and income deduction a.

84 b. c. d.

85 e. f. g. h.

86 i. Special Measures for Depreciation a. In General

87 b. Increased Initial Depreciations

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89 c. Additional Depreciations

90 Reserves a. Reserve for Overseas Investment Loss

91 b. Reserve for Prevention of Mineral Pollution in Metal Mining, etc. c. Reserve for Prevention of Certain Disasters d. Reserve for Large-scale repair of Shinkansen railways e. Reserve for Changing the Heat Quantity of Gas f. Reserve for Loss in Buying Back Computers g. Reserve for Reprocessing Used Fuels

92 h. Reserve for the Removal and Disposal of Atomic Power Generation i. Reserve for Extraordinary Casualties j. Reserve for Kansai International Airport Adjustment or Reserve for Central Japan International Airport Adjustment k. Special Reserve for Repairs l. Reserve for Locating New Mineral Beds in Japan and Abroad

93 m. Reserve for Utilization and Accumulation of Farmland Other Special Taxation Measures a. Special Additional Tax on Capital Gains from Sale or Transfer of Land, etc. b. Special Tax Deferral for Replacement of Business Assets

94 c. Special Taxation of Capital Gains from Expropriated Properties d. Other Special Deductions for Capital Gains from Land \ \ \

95 e. CFC Tax Measure

96 f. Transfer-Pricing Taxation a. b.

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98 c.

99 d.

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101 Income Examination General Investigation Procedures 2. Corporations under the Jurisdiction of the Examination Department \ \