My Number is coming soon.

My Number is coming soon in October 2015. (Now it is August 2015.)

Japanese government decided to introduce My Number system, where all the tax payers will have its own number that will stay unchanged for their lives.

Companies or sole proprietors are required to collect the numbers from its employees and suppliers, who are subject to the withholding tax, and report how much salaries or fees paid for each number when filing the year-end reporting for salaries and fees (法定調書合計表).

The actual practice of handling My Number starts in the coming fall this year (2015) when employers need to collect Dependent Form because the form should have the number of the employees and their dependents (e.g. spouse, children, parents).

The law says you need to confirm two things, that are (a) the number is accurate and (b) the person’s identity. It can be done by checking “physically” the notice of the number from the government and their identification card (e.g. driver license, passport).

I run my own accounting practice. We have employees (where I need to collect the number) and supplier professionals (e.g. lawyers, social insurance specialist) whom we need to pass on My Numbers of our clients as well as our clients whom I need to provide mine.

My Number will be used for tax, labor insurance and social insurances/pensions.

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実は最近までマイナンバーについては詳しいことは知らなかったのですが、お客様に説明する機会もあり、色々と勉強しました。

マイナンバーの取り扱いについては、色々と注意が必要なようで、慎重な取り扱いが要求されています。

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H27/8/22

最近、自宅のマンションが立て替えになることもあり、不動産の本を色々と読んでいます。これを機会に家を買いたいとは思うのですが、これからの人口減少や、マンションの老朽化の問題、スラム化の可能性などを考えると、どうしたら良いのか悩ましいものがあります。最近読んだ本で面白かったのは、「2020年マンション大崩壊」という本です。相当こわい内容で、これを読むととてもマンションなど買えなくなってしまいます。

確かに、現在、バブル時代に建設された越後湯沢のリゾートマンションが売れずに、管理費の滞納があったりして問題になっているようです。マンションは自分だけで意思決定ができるものではなく、集団として意思を決めていかなくてはいけないので、当然ではありますが、自分の思うようになるわけではなく、多数の人がいるので、皆が違う意見を持ってしまうと、にっちもさっちもいかなくなってしまうリスクはあると思います。

そうなると、資産としての処分可能性は大きく制限されてしまいますが、都会ではこれだけ一般的な住居となったマンションが全てこれからスラム化していって、法律が無策で政策的になにもできず放置していくとも思えないので、時代の流れとして、いつか何か解決策が出てくるのではないかとは思います。

 

Buying Japanese property by a foreign company and get refund of Consumption Tax

You need to know that you will be able to claim refund of Japanese Consumption Tax but you need to meet certain requirements.

 

1) If You will buy a property through a foreign company, you need to submit a form to the tax office to become a “tax filer” of consumption tax BEFORE the end of your fiscal year during which you purchased the property. The default status for a foreign company is “exempt” of consumption tax, which means you will nether have to file consumption tax return and pay but nor get consumption tax back.

 

You can change the status to “tax filer” but you need to submit a form called “form to choose as tax filer” or 課税選択届出書 before the end of fiscal year.

Also you need to know that once you choose the status, you have to remain as a tax filer for next two years at least (later you can change the status and go back to be “non-tax filer” again.

 

Because the consumption tax rate is 8%, it should have big impact on your cash flow projection

 

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Buying a zombie company for carried loss? – probably not a good idea

You may want to buy a zombie company which has been losing money for long time. It may not be a good idea…

 

As you may know, corporate tax loss can be carried for 9 years, as long as the company is blue in the tax status. But most of the cases, the carried loss in a zombie company you purchase from someone will not be allowed to be used. It seems there were markets to sell and buy such  dormant companies in the past with accumulated losses. It was regarded as a loop hole and the tax law was amended to prevent this.

 

I know a few clients who purchased zombie companies. Not only They can not use the loss that they expected to be able to use but also they sometime suffer from its past negligence in filing tax returns because they can not carry their own losses. Those companies were usually taken off the privilege of “blue” tax status and only “blue” company are allowed to carry its losses. “Blue” tax status is to be taken off if a company misses its deadline of tax filing two years in row.

Stock Options in M&A

If there are a company to merge (and continue to exist) (“Existing Company”) and a company to be merged (and become legally a part of the existing company) (“Merged Company”), stock options of Merged Company has to be compensated by stock options of Existing Company or by cash.

In case of Stock Swap (where shareholder of a company to become a subsidiary (Company A) will be given shares of a company to become a holding company (Company B)), stock options  of company A will be allowed to be forcefully converted to stock options of Company B, because the purpose of Stock Swap is to have Company A as 100% owned subsidiary of Company B. If stock options of Company A remains unchanged, Company A will not be owned 100% by Company B when stock options of Company A are executed.

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I was asked to review an investment contract recently in which foreign investors buy Japanese properties through foreign company as investment vehicle. It is long and complicated! There must be upsides and downsides in terms of tax rate, timing of being taxed, etc. I do not have a whole picture of course, but it seems that Japanese properties in general are still popular to foreign investors so far.