Japanese Tax Research Articles

ЖАПОНИЯДАҒЫ САЛЫҚТЫҚ ӘКІМШІЛЕНДІРУДІ ЦИФРЛАНДЫРУ ТӘЖІРИБЕСІН ЗЕРТТЕУ

The tax policy of the state in conjunction with the methods of tax administration is a determining factor influencing the amount of tax revenues of the budget. Tax discipline, forms and close interaction between taxpayers and regulatory authorities also play a significant role. The development of information and communication technologies (ICT) in recent decades has provided the tax authorities with a wide range of opportunities to increase government revenue, improve the efficiency and quality of services provided to taxpayers, including electronic filing of returns and payment of taxes, while reducing the administrative burden on taxpayers and reducing public administration costs. The first phase of digitalization was the computerization of routine tax administration processes (such as taxpayer registration and income records), and in the second half of last decade and early this decade, many tax authorities adapted their websites to simplify operations by introducing online forms and calculators for taxpayers. In June 2017, Japan National Tax Agency published a strategic plan for the Japanese tax administration called "Looking to the Future." This includes the pursuit of sound taxation and good governance to ensure that taxes are paid based on the understanding and trust of taxpayers. The National Tax Agency of Japan is well aware of the importance of continually moving toward the future it seeks, emphasizing the goal of transparent tax administration. Keywords: tax and customs administration, OECD countries, tax and customs, administrative costs, Tax Code, tax authorities, taxpayers, tax relations, digitalization.

Japan Introduced Full VAT Liability Regime to Digital Platforms

In this article, the author discusses a new Japanese tax reform named the “Platform Taxation” regime, which is, in effect, the long-awaited Japanese adoption of the full VAT/GST liability regime that is recommended in the OECD’s 2019 report.

History and Current Issues of the Japanese Tax Code

History and Current Issues of the Japanese Tax Code

Notes on Tax Disputes from Misapplication of Indonesia-Japan Tax Treaty: A Study Based on Indonesian Tax Court Decisions

This study aims to examine the legal, economic, and political aspects of Indonesia-Japan tax treaty. Next, it examines tax disputes brought to the Indonesian tax court due to the misapplication of Indonesia-Japan tax treaty. It digests the Indonesia tax court decisions stipulated during Fiscal Year 2015–2021. The Indonesia-Japan tax treaty has existed for more than 30 years to allocate the taxing rights of the two countries. Japanese business has invested in Indonesia through the establishment of subsidiaries. The disputes occurred due to, in the first case, the interpretation regarding whether a business entity or an individual is a party that can be categorized as a tax subject in accordance with the Indonesian and Japanese tax treaties. Second, is the issue of the definition, classification, and characteristics of income that result in differences in tax treatment. Third, we find that the tax rates used for income withheld or collected because of income classification. Finally, the disputes also occurred due to the fulfilment of administrative issues which has been taken most proportion of the disputes. Therefore, both parties in a dispute need to have a similar understanding on how the agreed tax treaty applies to the dynamic of business. tax treaty, tax dispute, international tax law

Family firms’ dividend policies: Evidence from a Japanese tax reform

We hypothesize that family firms’ dividend policies are in part determined by a consumption smoothing motive of family shareholders. Our paper tests this hypothesis using a Japanese dividend tax reform in 2011 which increased the dividend tax rate for only some groups of major family shareholders. In this quasi-experimental setting, we find that family firms with non-executive family shareholders, who were likely rentiers, counteracted the tax increase by increasing dividends. This behavior cannot be explained by standard theories of dividend policy, which predict a lower dividend payout, and highlights a unique governance problem in family firms.

COVID-19 and Fiscal Policies: COVID-19 and Japanese Tax Policy

This article comments on the tax measures contained in the Emergency Economic Measures for COVID-19, decided by the Japanese government on 7 April 2020 and further amended on 20 April 2020. It then speculates how Japan’s tax system may be able to finance the growing fiscal deficit over the longer run. COVID-19, tax policy, Japan, fiscal deficit, exit strategy, tax mix, tax incentive, social security, basic income.

세무대리인 제도의 개선 방안에 대한 고찰－일본 세무대리인 제도와의 비교－

우리나라 세무사 제도와 유사하게 세무대리인 제도를 운영하고 있는 국가로 일본의 세리사 제도가 있다. 일본의 세리사법은 세무사 자격 및 시험, 세무사의 업무범위 등에서 우리나라 세무사법과 유사한 입법체계를 취하고 있다. 이에 본 연구는 일본의 세리사법을 중심으로 세무대리인 자격 및 업무범위 등을 조사하고 우리나라 세무대리 관련 법률의 개정사항 및 법원 판결을 검토하여 모든 국민이 공정한 납세에 관한 권리를 보장받는 세무대리 서비스가 제공될 수 있도록 하는 세무대리인 관련 법률의 정비방안을 제시하였다. 본 연구에서 제시하는 세무대리인 관련 법률의 개선방안은 다음과 같다. 첫째, 세무사 자격이 인정되는 변호사로서 회계 및 세무분야에 대한 교육을 통해 세무대리에 대한 전문성을 인증받은 변호사에게 세무사 등록을 허용하고 모든 세무대리 업무가 아닌 법률상의 효과를 발생시키는 행위만을 허용하도록 세무사법이 개정되어야 한다. 둘째, 세무사법에서 규정하는 세무대리 각 호의 규정과 공인회계사법에서 규정하는 세무대리의 연계성을 법률에서 규정하여야 한다. 셋째, 소송관련 법률에 대한 교육 및 인증을 받은 세무사가 조세소송에서 소송대리인인 변호사의 보좌인으로서 진술하는 것을 세무대리 업무에 포함하는 것을 고려할 수 있다. 넷째, 세무대리인 제도에 대한 근본적인 해결방안으로 세무대리에 관한 기본 법률을 제정하는 방안을 제시한다. 현재 세무사법은 세무사 자격, 세무대리 범위 등 세무대리의 기본사항에 관한 규정이 혼재되어 있어 세무대리인의 직무범위에 대한 혼란을 발생시킬 수 있다. 따라서 세무대리에 관한 기본 법률을 제정하여 세무대리의 근거를 이에 두도록 하면 세무사가 아닌 공인회계사와 변호사가 수행할 수 있는 세무대리의 범위를 명확히 규정하는 입법이 이루어 질 수 있다. 본 연구의 결과는 세무대리 전문자격사 간에 발생하는 직무영역 중복에 대한 문제를 해결하면서 세무대리인의 전문성을 확보하고 이를 통해 세무대리 서비스를 제공받는 납세자의 이익을 보호할 수 있는 세무대리인 제도의 개선방안을 제시하였다는데 의의가 있다.

Hot Spring (Onsen) and Health

This paper describes the outline of balneology and the hot spring effect for the human body. Hot springs (onsen in Japanese) are defined by certain criteria for the ingredients and hot water temperature. The thermal effect, one of the physical effects of hot springs, expand blood vessels to improve blood flow and recover fatigue. In addition, the chemical effect as mineral content of hot springs enhances the thermal effect. Japan has 21 health promotion facilities using hot springs which are approved by the national government, and the cost of using these facilities is recognized as medical expenses under the Japanese tax system. The development of measuring instruments and epidemiological surveys at hot springs are necessary for the development of balneology.

고령화 사회를 대비한 빈집 처리에 대한 과세방안－일본의 세제분석을 중심으로－

고령화 사회를 대비한 빈집 처리에 대한 과세방안－일본의 세제분석을 중심으로－

Work or Housework? Mincer's Hypothesis and the Labour Supply Elasticity of Married Women in Japan

Married women exhibit more elastic labor supply responses to wage changes than do single women or men. Mincer (Aspects of labor economics, Princeton University Press, Princeton, 1962) argued that this is explained by a high elasticity of substitution between market work and home production. To test this hypothesis, I use a sharp change in Japanese tax rates to estimate labor supply and home production elasticities for Japanese workers. The results support Mincer's hypothesis: market and home production are near-perfect substitutes for married Japanese women, while home production effects are modest for other demographic groups. These results contrast with those for the USA, where male and female elasticities have been converging.

The OECD/G20 Base Erosion and Profit Shifting Initiative and the 2019 Tax Reform in Japan: Revisions to the Earnings Stripping Rules and the Introduction of Hard-to-Value Intangibles into Transfer Pricing

This article analyses the international aspects of the Japanese tax reform of 2019 relating to Actions 4 and 8-10 of the OECD/G20 Base Erosion and Profit Shifting initiative, which includes revisions to the earnings stripping rules and the implementation of an approach to hard-to-value intangibles into domestic transfer pricing legislation.

The impact of monetary and tax policy on income inequality in Japan

AbstractThis paper assesses the effects of the most recent monetary policy behaviour of the Bank of Japan (in particular, zero interest rate policy and negative interest rate policy) and Japanese tax policy on income inequality in this country during the period of 2002Q1 to 2017Q3. The vector error correction model (VECM) that develops in this research shows that increase in money stock (m1) through Quantitative Easing (QE) and Quantitative and Qualitative Easing (QQE) policies of theBOJsignificantly increases the income inequality. On the contrary, Japanese tax policy was effective in reducing the income inequality. Variance decomposition results show that increasing of income inequality by monetary policy is larger when comparing to decreasing effects of tax policy on income inequality. Cointegration andVECMresults show that monetary policy has both short‐run and long‐run impacts but for tax policy paper could not find any significant short‐run impact on income inequality. In addition, paper found that technological progress only in long‐run can reduce the income inequality by increasing the marginal productivity of labour with positive impacts on employment and wages.

Difference in Consumer Perception and Price Premium between Organic Food and Health Claimed Food Revealed by Japanese Value-Added Tax Hike

Difference in Consumer Perception and Price Premium between Organic Food and Health Claimed Food Revealed by Japanese Value-Added Tax Hike

Stanley Surrey and the Transformation of Administrative Law in Japan

Stanley Surrey, one of the most important figures in the history of American tax law scholarship, was a member of the Shoup Mission, which made a thorough recommendation on the Japanese tax system after the Second World War. In the Mission, he was in charge of the modernization of Japan’s tax administration system. Among other things, he recommended implementing the Blue Return System, a set of incentives for taxpayers to file their tax returns based on actual data on their economic activities. As is well-known in Japan, the System contributed significantly to public acceptance of the self-assessment approach. However, it is less known that Stanley Surrey, despite his original ideas that aimed at rationalizing the tax dispute resolution system, happened to have a considerable influence on the transformation of administrative law in Japan, especially on the birth of a common law doctrine with respect to the administrative agency’s duty to provide reasons in a wide range of administrative determinations. In this article, the author points out the following facts. First, in the Report of the Shoup Mission, Surrey proposed several measures for mitigating tax disputes between the government and the taxpayers. The proposal was identical to one that he and Roger Traynor had previously put forward to improve the federal tax administration of the United States. Second, Surrey suggested that the taxpayer had to be notified of the reason for an assessment of deficiency and that the more comprehensively the tax office could investigate the taxpayer, the more detailed reasons should be provided to him. However, Japanese lawmakers made the notification a privilege for blue return filers, that is, for those who filed tax returns based on data that recorded details of their economic activities. Third, the Japanese judiciary followed the literal interpretation rule in reading the statutory mandate to give reasons. Above all, the Supreme Court of Japan in Udono, a 1963 decision, held that an administrative determination sent to a taxpayer without sufficient reasons for it should be revoked. The Court did so mainly because it believed that the statutory mandate to notify the taxpayer of the reasons embodied the spirit of due process and that to obey the spirit, it was inevitable to sacrifice the collection of a correct amount of tax in favor of ensuring the administrative agency’s rational decision-making.

Japanese Tax Reforms Square Up to BEPS Action 1 to Tackle Tax Challenges of the Growing Digital Economy

In this article, the author focuses on Japan’s response to the tax challenges of the growing digital economy, including the country’s significant reforms in respect of the definition of permanent establishment, the application of consumption tax rules and the reach of anti-tax haven rules to controlled foreign corporations of Japanese-headquartered MNEs.

デラウェア州リミテッド・パートナーシップは我が国の租税法上の法人に該当し，当該パートナーシップを通じて不動産賃貸事業に出資した者につきその事業に係る損失の金額を同人の所得の金額から控除することができないとされた事例

デラウェア州リミテッド・パートナーシップは我が国の租税法上の法人に該当し，当該パートナーシップを通じて不動産賃貸事業に出資した者につきその事業に係る損失の金額を同人の所得の金額から控除することができないとされた事例

Tax reform in Japan: Is it welfare-enhancing?

The ongoing tax reform in Japan, particularly a corporate income tax cut financed by an increase in consumption tax, is expected to bring positive effects on investment and output. However, the overall effects on government fiscal balance and welfare can be ambiguous, depending on the dynamic responses of macroeconomic variables to changes in tax rates. This paper aims to provide quantitative forecasts of Japanese tax reform on welfare and fiscal balance using a small open two-sector dynamic general equilibrium model calibrated to the Japanese economy. The simulation results show that under conditions of unrestricted international borrowing and no consumption habit, a corporate income tax cut of 5% financed by an increase in consumption tax improves welfare by 0.53%. However, the positive effects of corporate income tax cuts decrease when international borrowing becomes limited or consumers show habit formation. In addition, we show that a corporate income tax cut in the tradable sector generates better welfare and fiscal consequences than a tax cut in the nontradable sector.

The crowding-out effect of housing subsidies on parental support: evidence from Japanese mortgage tax credits

Children may receive monetary transfers from their parents when they attempt to purchase a home. This raises the question of whether a homeownership-related subsidy provided by government displaces transfers received from parents. The purpose of this paper is to examine this question empirically, using a sample of Japanese home-buying households that are benefiting from a mortgage tax credit (MTC) as a model case. In the empirical analysis, we offer a test of the effect of the MTC on both the extensive and the intensive margins using the overall sample as well as subsample groups. The empirical results, which use the full sample, indicate that the MTC crowds out parental transfers on both the extensive and the intensive margins. In particular, the estimates of the latter suggest an approximately 100 % displacement. Subsample analysis demonstrates that the crowding-out effect is strengthened when children are young, are of low-income group, and are living in the rental sector previously.

Japan’s Supreme Court Classifies a US Delaware Limited Partnership as a Corporation

This article considers the implications of a recent Japanese Saikō-saibansho (Supreme Court) decision in which the Supreme Court held that a US Delaware limited partnership should be regarded as a corporation for Japanese tax purposes.

Decomposition of Redistributive Effects of Japanese Personal Income Tax, 1984–2009

This study examines how changes in the rate structure, deductions, and tax credits for personal income tax affect the inequality of posttax income, using micro data on Japanese households. The main contribution is the use of the fixed-income approach to assess the decomposed redistributive effects of the personal income tax. Several insights are obtained. First, the redistributive effects of the Japanese income tax declined during 1984-2009. Second, base effects substantially exceeded rate effects over this period. Third, credit effects greatly decreased the redistributive effect, as Japanese tax credits were proportional to tax liabilities with upper limits.