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  • 執筆者の写真Shinji Nakajima

1.Basic five rules in tax & accounting in running corporation.(1/5)

Chapter 1: Corporation tax act

1. Articles 4 and 5 of corporation tax act state as followings.

"Domestic corporations shall be liable to pay corporation tax."(article 4)

"In the case of a domestic corporation, corporation tax on income for each accounting period shall be imposed on its income for each accounting period."(article 5)

K.K.(Kabushikigaisha) and G.K.(Godogaisha) belong to ordinary corporation.

In order to fulfil obligation of corporation, accounting and tax return filing are required.

2. Accounting and tax return filing

Accounting work process are summarized as followings;

①Create accounting book

②Bookkeeping / Record daily transaction

③Preserve transaction evidence

④Financial statements closing / Determine accounting profits

⑤Approval of shareholders’ meeting

Tax return filing work process are summarized as followings;

①Determine taxable income and corporation tax

②Filing (Blue filing) and tax payment within two months from last day of accounting period.

3. Accounting Profits and Taxable Income

The “accounting profits” are calculated by subtracting expenses from revenues. The “taxable income” is calculated by subtracting deductible expenses from gross profits.

There is a difference between accounting “revenues” and “gross profits” for tax purposes.

Similarly, there is a difference between “expenses” and “deductible expenses.”

Why does this difference come from?

It is because the purpose of accounting and taxation is not the same.

Purpose of financial statements and accounting is to clarify the business performance and financial condition of a corporation to users of financial


On the other hand, purpose of corporate tax returns and taxation is to ensure fair taxation, promote economic policy, and secure tax revenue.

These differences are treated as exclusion from gross profits, inclusion in gross profits, exclusion from deductible expenses, and deductible expenses, which are added to or subtracted from the “accounting profits” to calculate the “taxable income.”

Finally, I summarize accounting work process and tax return filing work process.

The series of work processes from daily recording of transactions in accounting books, storage of accounting documents, preparation of financial statements closing, and tax return filing is as follows.

NAKAJIMA TAX & ACCOUNTING OFFICE provides one-stop “Accounting”, “Taxes”, and “Payroll” outsourcing service for foreign companies starting up business in Japan and foreign founders starting up business in Japan.

NAKAJIMA TAX & ACCOUNTING OFFICE also assists to prepare year-end Financial Statements closing and e-filing Corporate Tax Return and Consumption Tax Return.

Please check our disclaimer. Please note that the content is only information at the time of posting, and the content will not be updated even when laws are revised.




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