OAK Tax Corporation


2013 Japanese Tax Reform (corporate taxation mainly for SME)


Special depreciation and tax credit for domesticcapital investment
If  the total of the acquisition costs of the production facilities acquired by the blue form corporation for its domestic operations  exceeds the following (1) and (2) at the end of the fiscal year, either special depreciation of 30 % of the acquisition costs of the  machinery composing the production facilities or tax credit of 3 % of the acquisition costs can be applied.
(1) The total of depreciation expenses of depreciable assets for the current fiscal year
(2) 110 % of the total of the acquisition costs of the production facilities for the domestic operations acquired in the previous fiscal year

The tax credit is capped at 20 % of the corporate tax liability for the fiscal year.

(Note)
The production facilities mean the capital expenditures composed of the depreciable tangible assets directly used for the domestic  operations for manufacturing or other business of the corporation (excluding the facilities for the administrative department such as the  head office building).

This will be applicable for the fiscal years beginning between April 1 2013 and March 31 2015.


Special depreciation and tax credit for capital investmentfor improving business operation
If the blue form  SME(small and mediumsized enterprise) carrying out commerce, services, agriculture, forestry and fisheries industry  acquires building facilities (600,000 JPY per unit) or equipments (300,000JPY per unit) between April 1 2013 and March 31 2015  according to advice of the authorized specialists for the support of the business operation improvement and uses them for its business  in the fiscal year of the acquisition, special-depreciation of 30 % of the acquisition costs can be applied.
In addition, the SME whose paid-in capital is 30 million JPY or less has another option of the tax credit of 7% of the acquisition costs  and  it is capped at 20% of the corporate tax liability for the fiscal year.


Tax credit for increase of salary payment
If the blue form corporation increases the salary payment to the domestic employees (excluding directors and their relatives, etc.) in  thefiscal year, tax credit of 10% of the increase of employee salary can be applied as long as the following 3 conditions are fulfilled.
(1)The salary payment is increased by more than 5% compared with the salary payment of the base year. The base year means the  previous fiscal year of the fiscal year beginning first after April 1 2013.
(2)The salary payment of the fiscal year is not lower than the salary payment of the previous fiscal year.
(3)The average salary of the fiscal year is not lower than the average salary of the previous fiscal year.

The tax credit is capped at 10 % (20% for the SME) of the corporate tax liability for the fiscal year.

This will be applicable for the fiscal years beginning between April 1 2013 and March 31 2016.

Tax credit for increase of headcount of employees
If the blue form corporation submits the job creation plan and increases the number of insured employees of the national employment  insurance, tax credit of JPY 400,000 per the newly hired employee can be applied as long as the following 3 conditions are fulfilled.
(1)The number of the employees at the end of the fiscal year is increased by 10% or more and by 5 employees or more (2 employees  or  more for the SME) compared with the previous fiscal yearend.
(2) The job creation plan has to be submitted in advance to Public Employment Security Office within 2 months from the beginning of  the fiscal year.
(3)There is no dismissed employee in the current and previous fiscal year.
(4)The salary payment of the fiscal year exceeds the sum of (a) and (a) x (b) x 30%.
 (a) = salary payment of the previous fiscal year
 (b) = percentage of the net increase of employees of the fiscal year in the number of employees as of the previous fiscal yearend

The tax credit is capped at 10 % (20% for the SME) of the corporate tax liability for the fiscal year.

This will be applicable for the fiscal years beginning between April 1 2013 and March 31 2014.

Entertainment expense
The limitation for deductible entertainment expenses for the SME is increased from 6million JPY to 8 million yen. Another cap at 90%  ofentertainment expenses is abolished and fully deductible up to 8 million JPY.

This will be applicable for the fiscal years beginning after April 1 2013.