Essay About Japanese Corporate Income Tax Laws And Corporate Income Tax Law

My Business Dream
My Business Dream
i have a dream that i can have my own business. Japanese corporate income tax laws and regulations have a
significant effect on income measurement and financial
reporting by limiting the amounts of certain types of tax
deductions. Examples of these deductions include allowances
for bad debts and non-performing loans, depreciation of fixed
assets, and expenses for employee pensions and severance
indemnities. The Corporate Income Tax Laws primary
purpose is to obtain tax revenues for the government, so
companies often are not allowed to record tax deductions
even though a decline in the value of an asset or an increase
in a liability has occurred from an economic standpoint.
The Corporate Income Tax Law generally requires expenses
to be shown in a companys CC financial statements if the
company wants to record expense deductions for the purpose
of calculating taxable income. This requirement often leads a
company to choose an accounting practice or alternative that
lowers taxable income rather than one that more accurately
reflects economic reality (Nobes 1998, 250). The marginal
tax rate of about 50 percent for most Japanese companies
provides a strong incentive to adopt accounting practices that
result in the lowest possible tax payments.
If accounting standards under the CC or SEL do not address a
specific accounting issue, then companies use tax guidelines
to prepare financial statements. Except for a few small
differences, such as entertainment expenses not deductible for
tax purposes, a companys reported income under the CC orguidelines to enhance the disclosure of business risk
information in security reports along with governance-related
information such as internal control systems as well as
improved MD&A disclosure. Guidelines have particularly
advised to disclose more future risk information as it is more
decision useful and for any kind of risk reporting practices
they have recommended to follow US practice. But, the