3.9 Other principal corporate taxation regarding international transactions

In order to avoid double taxation of income internationally, a domestic corporation is allowed to credit foreign taxes imposed on a certain income up to the creditable limit. This foreign tax credit system provides; (1) credits for foreign taxes paid directly by a domestic corporation on income earned by it outside Japan (“direct tax credits”); (2) credits fブラック ジャック やり方 カジノmounts of tax that have been specially reduced or exempted in a country under the provisions of a tax convention with that country (“tax-sparing credits”); and (3) credits for foreign taxes corresponding to the income of a specified foreign subsidiary or similar entity that has been combined with the income of a domestic corporation under so-called anti-tax haven taxation system.

A Foreign Dividend Exclusion system has been introduced to avoid international double taxation. This allows domestic corporations to exclude from their taxable income a certain amount of dividend income from qualifying foreign subsidiaries (i.e., corporations that meet shareholding requirements and other conditions).

In order to prevent corporations from setting the prices for transactions with a parent company or other overseas affiliate (foreign-related parties) at a different amount from ordinary (i.e. arm’s -length) prices so as to transfer profits overseas, a transaction is treated as having occurred at the arm’s length price and the amount of tax calculated accordingly if the income derived from the transaction differs from the arm’s length price. As a reporting system that enables each country’s tax authorities to grasp the overall pictures of global companies’ business activities has been established, corporations belonging to certain multinational enterprise groups have to submit a prescribed report from the fiscal year of their ultimate parent company beginning on ブラック ジャック やり方 カジノfter April 1, 2016.

In order to prevent domestic corporations from evading taxes by retaining income through a foreign subsidiary established in a so-called tax haven, a domestic corporation is taxed by including in its taxable income an amount corresponding to its interest in the retained earnings of that foreign subsidiary.

If a corporation's borrowing from an overseas controlling shareholder exceeds three times its equity (ブラック ジャック やり方 カジノn alternative reasonable ratio), interest on borrowing corresponding to the excess cannot be deducted from taxable income.

Deductions for payments of interest, etc. by corporations to parent companies or other affiliates are disallowed to the extent that such interest exceeds 20% of the adjusted taxable income.

However, this will not apply if the amount of interest paid, etc. to affiliates is 20 million yen or less, or if the total amount of the subject net interest paid, etc. ブラック ジャック やり方 カジノll domestic corporations with capital relationships exceeding 50% is 20% or less of the total amount ブラック ジャック やり方 カジノdjusted income of these domestic corporations.

Note that where interest payments are subject to both these rules and the rules on thin-capitalization taxation described in 3.9.4 above, the rules under which the non-deductible amount would be greater shall apply.

Considering the progress of international discussions and trends toward implementation in other countries, among the rules for global minimum taxation, corporate income tax on the global minimum tax for each applicable fiscal year has been established as a legislation for the Income Inclusion Rule (fブラック ジャック やり方 カジノpplicable fiscal years beginning on ブラック ジャック やり方 カジノfter April 1, 2024). In line with this, a system (information declaration system) is established for corporations belonging to certain multinational enterprise groups to provide certain matters to tax authorities.