みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo

みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo, tax tips, accounting, running business

Tax penalties

time 2016/06/26

item Rate
Intentional 35-40%
Missing Deadline/Failure in filing -tax up to 500,000 yen 15%
Missing Deadline/Failure in filing -tax over 500,000 yen 20%
Under reporting -reported and corrected by tax payer w/o audit 5%
Under reporting found by tax audit – tax below 500,000 yen 10%
Under reporting found by tax audit – tax over 500,000 yen 15%
Interest Charge for the first 2 months 1.8%
Interest Charge after the first 2 months 9.1%

(Never cheat or lie to the tax authority – Heavy Penalty for cheating)

Possible price for cheating or lying to the tax authority can be very expensive. Especially cheating your income by hiding your revenue will probably cost very expensive consequences.

Hiding revenue is to be regarded as “intentional”, and therefore it will be subject to “Heavy Penalty”, which is 35-40% of the tax you try to avoid.

As to the expenses, as long as you think it is necessary or related to your business, it can be widely accepted. Meeting with your friend for business advice or possible business development may probably be accepted as a justifiable expense.

Even if it is not accepted, you will not be regarded you cheated, because it should be a just difference in view, unless it is too extreme and aggressive.

(File tax on time, and pay the tax later, if cash flow situation does not allow)

The penalty for missing the deadline to file is very heavy. Even missing one day of the deadline will be 15-20% of its own tax.
if the consumption tax is 5,000,000 yen and the cost of missing the deadline by one day will be 1,00,000 yen.

It may be ok to delay payment of the tax, if your cash flow does not allow, because the penalty is only interest by annual rate of 1.8%. But a failure in filing by the deadline is very costly.

(Under-reporting)

A mistake in accounting is usually to fall in this category. For example, personal meal or shopping are usually to be categorized into this group. A TV set in home is a typical example. Unless the amount is huge, the tax authority will not regard them as intentional and therefore charge the heavier penalty (of 35-40%).

(Be imaginative and consult with your tax accountant)

Tax law is a law, which cannot cover every single situation in the real world. By exploring possible combination of tax structure, that you think will probably save your tax, consult your tax accountant. He might not be able provide you many new tax structure, but he should be able give you his feedback of rather positive or no.
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先日、フランス人のフリーランスの会と言うところで日本の税金についてのプレゼンをやってきました。ああ、疲れた。

税金も、英語で税金を説明することも毎日やっているので、何とかそこそこの充実度でやりきる事が出来ました。人前で話すのは得意でないのですが、毎日やっていることと言うのは、何とか出来るものですね。

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