Happy New Year from Solid Japan

Solid Japan wishes you and your family a happy, healthy, and prosperous 2011. We look forward to continuing to serve you throughout the new year.www.solidjapan.com

Kan Administration Announces Corporate Tax Cut

Prime Minister Naoto Kan in December unveiled a plan to reduce the corporate income tax rates from the current 40% to 35%. This follows several months of consultation with industry groups and the general business community. The move is intended to bolster Japan’s competitiveness and to help keep jobs from migrating overseas. Under the plan, businesses will also be able to apply tax loss carry forwards for up to 9 years instead of the current 7 years. The current special reduced tax rate of 18% will also be further reduced to 15% and extended for 3 years for small and medium sized business. Following the 3-year extension, the regular rate will be 19%, reduced from 22%.The tax cut plan first must receive diet approval and implementation is expected from fiscal 2011.

Fixed Asset Report

Businesses in Japan must complete and file a fixed asset report to their local tax office by the final day of January. Fixed assets are generally defined as assets with a value of JPY100,000 or above. However, depending on the value and type of the asset, the method of treatment can vary. Your tax advisor can help determine proper classification of your fixed assets for tax purposes. Or contact Solid Japan for assistance. info@solidjapan.com

January Payroll Report Deadlines

HR managers and payroll administrators will want to be aware of the January 31st deadline for submitting the annual Hoteichosho and the Kyuryo Hokokusho reports. The Hoteichosho is the annual report that must be submitted to the national tax office concerning the total salary, retirement allowance, etc., paid to each employee during the year. The Kyuryo Hokokusho is a similar report sent to the employee’s local tax office, which is used to determine their local inhabitant tax amount. For further information, please speak with your payroll provider or contact Solid Japan. info@solidjapan.com

Economic Growth Exceeds Previous Reports Japan’s economic growth for the quarter ending September 30th, was recently re-stated to 4.5% on an annualized basis. This is somewhat higher than the 3.9% originally reported by the government. The relatively strong growth is being attributed in large part to recent government stimulus initiatives.

Japan and Hong Kong Tax Treaty Japan and Hong Kong concluded a tax treaty agreement in November which aims to reduce the tax burden on certain types of income, and provide relief against double taxation for those conducting business in both countries. There are also information sharing stipulations contained in the agreement. Once ratified by the governments of both countries, the treaty’s various provisions will begin taking effect at different times in the year following ratification. Among the treaty’s main areas of focus are capital gains, interest, dividends, royalties and income tax. For additional information visit: http://www.ird.gov.hk/eng/pdf/Agreement_Japan_HongKong.pdf

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