Tuesday, October 15, 2013

Treatment of losses in Japan corporate tax law


Net loss in each business year is carried forward for the next nine years (or seven or five years in certain cases) if Blue Form Tax Return is filed for the business year in which the loss arose, and a final tax return is then filed every subsequent year. If a corporation has capital in excess of 100 million yen or is a wholly owned subsidiary of a large corporation with capital of at least 500 million yen, the amount of loss that may be deducted from income is limited. Except in few cases, certain small and medium-sized enterprises filing the Blue Form Tax Return, are allowed to carry back a loss to the business year commencing not more than one year prior to the date of commencement of the business year in which the loss arose, receiving a full or partial refund of the amount of corporate tax in the business year in which the loss was carried back.