December is almost here... The cold weather continues. Have you all completed your year-end tax adjustments?
When I'm writing my year-end tax adjustment documents, I feel like this year is almost over.

So, today I wanted to touch on the basics of "taxes," so I spoke with Mr. H, who is in charge of accounting and is a popular employee consultation point.



■□━━━━━━━━━━━━━━━━━━・・・・・‥‥‥……… 
–First, please tell us about your accounting duties.
The work can be broadly divided into four areas: cash flow management, invoice issuance processing, financial settlement and disclosure work, and budget and actual management.

First, in the area of ​​cash management, we handle the processing of payments from clients and the management of accounts receivable. We also handle the settlement of employee advance expenses, the processing of payments to subcontractors, and the management of purchases payable.
As the name suggests, "invoice issuance processing" refers to the issuance processing of invoices related to our company's sales and the recording of sales.

In the "disclosure work," the company's overall sales, cost, and selling and administrative expenses are compiled on a monthly basis to determine the profit for that month.
As we are a listed company, we calculate tax amounts quarterly and also prepare financial statements and securities reports to disclose our performance to stakeholders.

Finally, there is "budget-to-actual management," which involves managing the difference between budget and actual results and progress figures for the entire company based on the budget-to-actual numerical data managed by each business division.


–You do a lot of things. Even in general, it seems like you do a wide range of things.
In addition to that, we also respond to accounting audits to ensure that accounting procedures are being carried out appropriately, and we also respond to internal controls known as J-SOX, but it is true that in general, the issuance of invoices is handled by sales administration, and J-SOX-related matters are handled by the internal audit department.
It's rewarding for me because it gives me experience.

–That means everyone relies on you. Now, let's get straight to the main topic. Please tell me about the different types of "taxes."
First of all, there are two types of taxes: national taxes, which are levied by the national government, and local taxes, which are levied by local governments.
Japan, in particular, is a country with an exceptionally large number of taxes, with 25 national taxes and 26 local taxes, making it one of the top countries in the world. For this reason, people in Japan are sometimes jokingly told that "you have to pay taxes except when you're sleeping."

For example, if you earn money you have to pay "income tax," if you give money you have to pay "gift tax," if you go shopping or eat you have to pay "consumption tax," if you smoke you have to pay "tobacco tax," if you travel by car you have to pay "automobile tax" and "gas tax," if you buy a house you have to pay "real estate acquisition tax," "fixed property tax," and "registration tax," and even if you just live in a place you have to pay "resident tax" and "city planning tax," and the list goes on.
You might think that once you die you will finally be free from taxes, but you will still be subject to inheritance tax...


Of course, it is used to make our lives better, but at least as long as we live in Japan, it can be said that it has an inseparable relationship with taxes.

–It seems like it affects you even when you're sleeping”(-“”-)”…Next, please tell us about “corporate tax” and any current issues you may have.

Simply put, it refers to "taxes levied on income earned by corporations," and generally refers to three types: "corporate tax," "corporate inhabitant tax," and "corporate business tax," which are collectively referred to as "corporate taxes, etc."

"Corporate tax" and "corporate inhabitant tax" are equivalent to "income tax" and "inhabitant tax" when considered as individuals, and to these there is also "corporate business tax", which is levied only on corporations.

This is a topic that is close to the current issue, but in 2016, Japan's effective corporate tax rate was 29.74%, ranking 7th in the world. The top spot was taken by the United States at 40.75%.
(Source:http://www.mof.go.jp/tax_policy/summary/corporation/084.htm）
As an example of a tax haven that was in the news a while ago, Ireland's effective tax rate is 12.50%, which is more than 28% lower than the number one ranked country, the United States.

It is said that this is why major companies around the world are flocking to these tax havens to set up paper companies as a way to avoid paying taxes, and the current problem of tax havens is that tax revenue that should have gone to the country itself is instead flowing to other countries where there is no actual business.

Of course, this is also part of management policy and is not currently considered illegal, but for these reasons, there may be an increasing movement towards regulation in the future.

–So it is considered an effective tax strategy for companies. Now let’s change the perspective a bit and tell us about the familiar “income tax.”
Since this is the time of year, I will explain about income tax while touching on ``year-end adjustments.''
If you work for a company, you will have to go through year-end tax adjustment once a year, but I think many people just think of it as something that gives you a small refund at the end of each year.


Simply put, year-end adjustment is when a company adds up and tallys up an employee's salary for the year and calculates the tax due.
Your monthly pay slip will show an amount deducted each month as "income tax," but this is only an estimate (a little more is deducted), so at the end of the year, your salary for the year is added up and tallied to calculate the correct tax amount, and the difference between that and the amount deducted for 12 months is refunded to you.

If you have paid for life insurance or other benefits, you can deduct these amounts from your combined salary, reducing your final tax amount and increasing the amount of your refund.

We also often receive questions such as, "I received a paper for my life insurance payment later," or "Can I do a retroactive year-end adjustment?" Retroactive year-end adjustments are not possible, but in that case you can receive a refund by filing a tax return.
"Year-end adjustment" means that your company will calculate your tax amount on your behalf, while "tax return" means that you calculate your tax amount yourself and submit the documents to the tax office, which is a bit of a hassle, but you will not receive a tax refund unless you file a tax return.

If you pay too little tax, you will be subject to reminders and penalties (additional tax), but if you pay too much, the tax office will not contact you about a refund unless you take action.

I know some of you may be feeling unsatisfied, but you can file tax returns and claim refunds going back up to the past five years, so if you've left it as it is, we recommend that you file tax returns all at once, including past years!

-Finally, please tell us about recent topics such as tax reform.
The tax reforms in fiscal 28 included many tax reforms, such as a reduction in the corporate tax rate and the introduction of a reduced consumption tax rate.
This time, I would like to touch on the "expansion of the consumption tax exemption system for foreign tourists."
This is a noteworthy change for companies that are expanding their business with inbound demand in mind, and of course, our company also provides services for such companies (AsiAD byGMO) This is no exception.

This is a system that allows foreigners who meet certain conditions to be exempt from consumption tax when shopping at duty-free shops in Japan. Previously, the system only applied to purchases of at least 1 yen, but with this latest revision, it now applies to purchases of 5 yen or more. The paperwork required for the application has also been simplified, lowering the barrier to application.
The aim is to boost the purchasing power of foreign tourists in Japan.


First of all, what is consumption tax? Simply put, it is a tax that is levied on anything you spend, eat, or receive services in Japan.
For foreign tourists, if they buy products in Japan to take back to their home country as souvenirs to use (to display, eat, etc.), they will not be charged consumption tax because they will not be used in Japan. This is the "Consumption Tax Exemption System for Foreign Tourists."
So, this may be good news for companies that offer products and services aimed at tourists visiting Japan.

There are a lot of complicated topics about taxes, but since it's something that you will have to deal with in life, it's a good idea to know the basics!
■□━━━━━━━━━━━━━━━━━━・・・・・‥‥‥……… 

Thank you to Mr. H, who is extremely busy, providing advice to many employees and training new graduates (we even have new graduates assigned to our accounting team!).

By the way, the photo of Mr. H was cut due to various circumstances... (;∀;)
Stay tuned for the second part of our accounting story!!

*Please note that this article also includes Mr. H's personal opinions.