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Amendment to Overtime Premium Rates

SMEs are required to pay a 50% overtime premium for monthly overtime work exceeding 60 hours The Japanese Ministry of Health, Labor and Welfare has made a new amendment towards premium wage rate for overtime work for small and medium enterprises (SMEs). The amendment implemented in April 2023 raised the overtime premium rate to 50% for SMEs, which previously only applied to large enterprises with grace period measures. With this amendment, the reduction of working hours is expected to lead to improved productivity and performance, but the economic burden on SMEs due to the payment of overtime premiums is also acknowledged as a challenge that needs to be addressed. ■Alternative Leave System: It is also possible to establish a system to grant paid leaves, known as “alternate leaves” in lieu of paying the increased premium wages.  The introduction of this system requires a labor-management agreement, and there are provisions specifying that the leave must be granted within two months from the day following the end of the month with overtime work exceeding 60 hours. ■Relationship with Late-Night and Holiday Work: If overtime work exceeding 60 hours is performed during the late-night hours, employers are obligated to pay an overtime premium

Revision to Guidelines for Accounting Standards of SMEs

In Japan, there are “Guidelines for Accounting of Small and Medium-sized Enterprises” (the Guidelines) that non-publicly listed companies or that are not large companies under the Companies Act can rely on when preparing their financial statements. Such companies are audited by Certified Public Accountants.  These Guidelines were recently revised on May 10, 2023. These Guidelines are created by four organizations: Japan Federation of Certified Public Tax Accountants’ Associations, The Japanese Institute of Certified Public Accountants, The Japan Chamber of Commerce and Industry, and The Accounting Standards Board of Japan, in cooperation with the Ministry of Justice, the Financial Services Agency, and the Small and Medium Enterprise Agency. Compared to the corporate accounting standards that listed companies rely on in preparing their financial statements, the standards in these Guidelines are simplified and easier for SMEs to deal with. For example, these Guidelines allow the use of the “Last Purchase Price” method inventory valuation. In addition, certain tax accounting treatment is also permitted, resulting in fewer adjustments required for corporate tax returns. For example, the calculation of the allowance for doubtful accounts can be based on the criteria specified in the Corporate Tax Law under certain conditions. Furthermore, companies that prepare their

New invoice system in japan 2023

Introduction to the New Japanese Invoice System Implementation & Qualified Invoice Issuers

May 2023 Japan will implement a qualified invoice storage method (Japanese Invoice System) from October 2023. Under this new Japanese Invoice System, all qualified invoices, where tax credits for Japanese Consumption Tax (JCT) are applicable, will require proper storage as per the stipulated guidelines. Otherwise, deductions through tax credits may not be applicable, and the amount of JCT payments may increase.   A ‘Qualified Invoice’ is an Invoice or Receipt that is issued by a qualified invoice issuing company and includes the following 6 components   1. The name and registered number of the qualified invoice issuer  2. Transaction Date3. Transaction Detail (clarification of item subject to the reduced tax)4. Transaction Amount (Display respective amounts by applicable tax rate)5. Consumption Tax Amount along with the applicable tax rate6. Name of the counterparty along with billing address  Input of registered number and consumption tax along with the applicable tax rate is the key differentiator from the current invoicing system. A Qualified Invoice Issuer is a taxpaying business that has applied to the tax office and has been registered as a qualified invoice issuer with tax office. Upon registration as a qualified invoice issuer, the business operator will be given a registered number, and that

The Valuation of Startups (Japanese text only)

2023年4月4日に公認会計士協会が、「スタートアップ企業の価値評価実務」というガイドライン(以下、「スタートアップ価値評価ガイドライン」)を公表しました。 これは今まで日本においては明確なガイドラインが無かったスタートアップ企業の価値評価の留意点や種類株式の価値評価を中心に解説しています。

About U.S. Export Regulations – Part I: Overview of U.S. Export Regulations (Japanese Text Only)

昨今、経済安全保障問題について活発に報道されるようになり、「輸出規制」という言葉が身近に聞かれるようになりました。輸出規則というと、日系企業にとっては、日本から海外に製品を輸出する際に、日本(自国)の輸出規則の対象となり、あくまでも自国だけの規制と思わている方も多いのではないかと思います。しかし、米国の輸出規則には、「再輸出規則」と呼ばれる制度があり、たとえ日本で製造した製品でも、米国産の製品・部品、ソフトウェア、技術が一定以上含まれている場合や、米国産の技術を使用して製造した製品である場合は、他国へ輸出する際に米国政府の許可が必要になることがあります。このような場合、無許可で製品を輸出してしまい、米国の輸出規則に違反してしまうと、禁固刑や米国製品、技術についての取引が禁止になるといった厳しい罰則があります。日本で製造活動を行っている企業でも、米国産の製品、技術、ソフトウェアを取扱っており、中国、ロシアを含む、米国が規制している国々と取引を行っている場合は、米国の輸出規制に注意する必要があります。

Key Takeaways from the 2022 Amendments to Japan’s Transfer Pricing Administrative Guidelines: Loans and Debt Guarantees (Part 1 of 2)

In June 2022, the National Tax Administration Agency (NTA) announced amendments to the Transfer Pricing Administration Guidelines. The amendments are thought to reflect the January 2022 update to the OECD Transfer Pricing Guidelines on financial transactions, and they revise Japan’s legislation on the treatment of financial transactions and cost contribution agreements (CCA). It should be noted that this may affect Japanese companies operating outside of Japan, including those operating in the United States.

HLS Global and AGS Consulting Establish Joint Venture

A partnership created to empower Japanese companies to expand globally Torrance, CA, U.S.A. / Tokyo, Japan: On December 6, 2022, Hotta Liesenberg Saito LLP (HLS) and AGS Consulting Co., Ltd. (AGS) announced the establishment of a joint venture to provide a wide range of support services to Japanese companies expanding globally. In announcing this significant partnership, the two companies are sharing their vision, spirit, and resources while fully committed to the growth and success of all our clients.

What Is the Indication of Fraud (“Red Flags of Fraud”)?

[Japanese text only] 過去の事例を言うまでもなく、不正が発覚すると、企業の業績だけでなく評判にあたえるダメージも大きく、例えば、不正の発覚により取引先から取引が縮小・停止されたり、人の採用が難しくなる、最悪の場合には会社の存続の危機を迎えます。こういった事態を回避するためには、積極的に不正を抑止することが重要です。

One Point Advice on Transfer Pricing Taxation

Transfer pricing is a taxation to set appropriate prices for cross-border transactions with foreign related parties based on the “arm’s-length principle” and to require appropriate tax payment in each country. For example, a transaction in which a U.S. subsidiary purchases a product developed and manufactured by a Japanese parent company and sells it in the U.S. market occurs between related parties. Because of this, the price for this transaction can be arbitrarily determined. In this case, if the sales price from the Japanese parent company to the U.S. subsidiary is too low, the income attributable to this transaction will be transferred from the Japanese parent company to the U.S. subsidiary, resulting in an understatement of taxable income reported in Japan and, conversely, an overstatement of taxable income reported in the United States. Since the income reported in Japan will be understated, if this problem is pointed out during a tax audit, the Japanese Tax Authority will reassess the income based on the correct price and impose additional tax payments, resulting in a double taxation.

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