Foreign investors are moving into the flourishing Japanese property market, and many are also investing in infrastructure.
Japanese inbound real estate investment is increasing partly due to the upcoming 2020 Olympics, which will be held in Tokyo, the most populous city on earth. "Real estate transactions have been hot for a couple of years. Very large transitions have been made and it takes up the majority of inward foreign investments in Japan due to preparation of the 2020 Olympics in Japan," said Eric Roose, head of Withers Japan Zeirishi Houjin. "The real estate boom is expected to continue until 2020."
Atsushi Oishi of Mori Hamada & Matsumoto noted that many Chinese and foreign investors are trying to acquire Japanese real estate because investors find the market price reasonable and even lower than its real value, particularly when considering Japan's weak currency and unprecedented 0 to -0.1% interest rates. "This trend is not only occurring in central cities like Tokyo or Osaka, but also resort areas like Hokkaido or Okinawa, with prices for real estate continuing to increase," said Makiko Kawamura of DLA Piper.
The government introduced a new Japanese consumption tax (JCT) treatment on cross-border digital services transactions, effective from October 1 2015. The rule is similar to regulations brought in in the EU, South Korea and New Zealand, and to those planned in Russia and Australia. It will affect non-Japanese providers making sales into Japan involving digital products and services.
"The new JCT rules will cause non-Japanese digital service providers to lose their pricing advantages in the Japanese market and will also require them to change their internet systems," said Ryutaro Oka of Baker & McKenzie. "The rule is not particularly complicated but the definition is not entirely clear. Therefore, non-Japanese digital service providers need to be aware of this new JCT law or they may face difficulties in Japan and become subject to scrutiny by the Japanese tax authorities," he added.
Furthermore, in response to the BEPS project, numerous new documentation rules are being introduced. Hence, Japanese corporates are trying to establish global tax governance structures in order to have control over subsidiaries' tax matters. "The reason why Japanese companies are paying greater attention to the tax governance structure is because, traditionally, Japanese multinationals decentralised tax governance and headquarters did not manage subsidiaries' tax issues," Yuichi Komakine, tax leader at KPMG.
This move requires more tax professionals, and Japanese tax firms are supporting large corporates in need in various ways as they do not have sufficient resources. There are several ways that tax firms are helping out corporates, such as using IT tools, accompanying corporates' in-house tax teams part-time, and undertaking outsourced work. Japanese corporates are also reviewing permanent establishment (PE) issues as the definition has changed.
Another noteworthy trend is that Japanese corporations are facing ageing problems as founders and the directors of many business empires are getting old and need to pass on companies to the next generations. Therefore, inheritance tax planning is important for Japanese corporates at the moment. "The value of company shares is subjected to inheritance tax and a couple of years ago the inheritance tax rate was reduced from 70% to 50%," said Ryutaro Uchiyama of Tokyo Kyodo Accounting. "But now, as the government is facing financial shortages it is increasing the tax, mainly targeting high net worth individuals by increasing inheritance tax to 55%. I think it is expected that the government will continue to increase inheritance tax."
Ernst & Young Tax Co.
Kasumigaseki Building 32F
Tel: +81 3 3506 2411
Area/Country Tax Leader
Tel: +81 3 3506 2411 (Tokyo) / +81 6 6315 1298 (Osaka)
Law Leader, EY Law Co. – Member of Dai-Ichi Tokyo Bar Association
Tel: + 81 3 3509 1668
Business Tax Services *co-leader
Tel: +81 3 3506 2843
Tel: +81 3 3506 2463
Global Compliance and Reporting *co-leader
Tel: +81 3 3506 2843
Tel: +81 3 3506 2463
Tel: +81 3 3506 2678
International Tax Services
Tel: +81 3 3506 2426
Tel: +81 3 3506 2430
Tel: +81 3 3506 2637
Grant Thornton Taiyo Tax Corporation
Grant Thornton Taiyo Tax Corporation is a leading and experienced tax firm, providing dynamic organization with high quality taxation services.
Aoyama Bldg. 9F, 1-2-3 Kitaaoyama, Minato-ku
Tokyo 107-0061 Japan
Yoichi Ishizuka (CEO)
1-1-2 Otemachi, Chiyoda-ku
Offices in Japan:
Tokyo, Nagoya, Osaka, Fukuoka
Bangkok, Beijing, Shanghai, Hanoi, Hoh Chi Minh City, Jakarta1, Singapore, Yangon, Hong Kong2
1Associate Office 2Affiliate Office
Yo Ota <firstname.lastname@example.org>
Akihiro Hironaka <email@example.com>
Nishimura & Asahi ("N&A"), which has approximately 500 Japanese lawyers (bengoshi), 42 foreign lawyers, tax counsel (zeirishi) and other professionals, is the largest law firm in Japan, and its practice areas cover all aspects of international and domestic business and corporate activities. N&A is particularly renowned for its expertise in dealing with various types of tax controversies, exemplified by its unparalleled track record of victories before the Japanese courts. Further, N&A develops and implements creative tax solutions and strategies for M&A transactions, group restructuring, financing arrangements, the development of financial products, and other complex transactions. N&A understands its clients' growing needs, and its fully integrated team of lawyers and professional staff are proud to share the same fundamental philosophy: An uncompromising commitment to excellence.
Since its founding in 1993, Tokyo Kyodo Accounting Office (TKAO) has provided top class accounting and taxation services. Marshalling its highly trained cadre of certified public accountants, licensed tax attorneys, consultants and experts from other fields, TKAO provides services exquisitely tailored to the specific needs of its corporate and individual clients.
TKAO's professional service offerings include International Taxation / Transfer Pricing, Corporate Finance, Private Banking / Financial Planning, Structured Finance, SPC Management and Other Services.
International Taxation / Transfer Pricing / FTAs
TKAO provides a wide range of accounting and tax consulting services with regard to international trades and cross-border investments, i.e. transfer pricing, FTAs, inbound and outbound international tax planning.
TKAO provides a wide range of services relating to key strategic transactions, from financial advisory and tax planning in connection with restructurings, stock purchases, business transfers, mergers, capital increases through third party allotments, formation of business alliances and initial public offerings, to post merger integration services.
Private Banking / Financial Planning
TKAO provides complete and comprehensive services that cover the entire wealth formation and succession cycle, e.g. advisory services for initial public offerings of shares or other ways of monetizing privately owned businesses; consulting services for financial asset investment, e.g. units in investment trusts, real estates and insurances or inheritance and business succession planning services.
TKAO is regarded as the premier accounting office in Japan's securitization industry with roles in numerous key projects, covering securitization as well as investment fund transactions for various asset classes, including receivables, real estate and intellectual property.
As a SPC pioneer in Japan, TKAO provides a broad range of services covering the entire SPC life cycle – from advisory services for transaction structuring, and SPC incorporation, administration and management of SPCs during the on-going phase, to liquidation services.
|Corporate Income Tax||23.9%||A|
|Capital Gains Tax||23.9%||A|
|Net Operating Losses (years)|
|Interest||15%||20%||B C D|
|Royalties from, for example, patents, know-how||20%||C|
|Branch Remittance Tax||0%|
A Local income taxes are also imposed. The resulting effective corporate income tax rate is approximately 33% (35% for corporations with stated capital of JPY100 million or less).
B Except for the withholding taxes on royalties and certain interest, these withholding taxes are imposed on both residents and non-residents. For non-residents, these are final taxes, unless the income is effectively connected with a permanent establishment in Japan. Royalties paid to residents are not subject to withholding tax.
C Under the special law to secure funds for reconstruction related to the March 11 2011 disasters, a special additional income tax (2.1% of the normal withholding tax due) is imposed for a 25-year period running from January 1 2013 through December 31 2037. As a result, the 20% withholding tax rate is increased to 20.42%, and the 15% rate is increased to 15.315%. However, this special additional income tax does not affect reduced withholding taxes under existing income tax treaties.
D Interest paid to residents on bonds, debentures or bank deposits is subject to a 20% withholding tax, which consists of a national tax of 15% and a local tax of 5%. Other interest paid to residents is not subject to a withholding tax. Interest paid to non-residents on bonds, debentures or bank deposits is subject to a 15% withholding tax. Interest paid to non-residents on national and local government bonds under the Book-Entry Transfer System is exempt from ithholding tax if certain requirements are met.
E The loss carryback is temporarily suspended.
F The carryforward period of losses arising in fiscal years beginning on or after April 1 2017 will be extended to 10 years.
Baker & McKenzie's tax team is led by Edwin Whatley and has 18 professionals in the tax practice, including six partners. Whatley is recognised for his skills in international taxation particularly in US and Japanese tax law, corporate and international tax planning, transfer pricing and tax controversies for national and foreign companies. He also advises on transfer pricing analysis and controversies.
The tax and transfer pricing group provides comprehensive tax advice including a range of local and global tax planning, structuring, controversy and economics services to multinational clients, specifically covering international tax, indirect tax, cross-border estate planning, real estate transactions, structuring and establishment of new business operations and joint ventures, tax-efficient financing structures and project finance, tax minimisation planning and implementation, M&A, and representation in audits, administrative appeals, and litigations.
Since October 2015, the government of Japan extended the coverage of consumption tax (VAT) to cross-border electronic commerce by foreign businesses, such as the provision of digital books, music and advertisements. Led by Whatley, a Baker team assisted a coalition of blue chip IT companies to lobby the Japanese tax authorities in relation to the newly-introduced consumption tax on digital services. The Tokyo Tax team has been closely collaborating with the Tax team from the Palo Alto office.
Deloitte Tohmatsu Tax team, led by Shinya Matsumiya, has more than 700 tax professionals with more than 60 partners in different disciplines. Since the establishment of the firm, the team has endeavoured to provide excellent professional services.
The team has several service lines including global business tax, international tax, merger and acquisitions transactions, business reorganisation, transfer pricing consulting, US/China/India tax services, global employer services, indirect tax, tax dispute resolution and business process outsourcing services as well as legal services.
Matsumiya has a strong knowledge about corporate tax including M&A, reorganisation tax, and international tax, specialising in the fields of consumer products and life sciences and healthcare.
Deloitte reports that it serves approximately 20% of multinational companies in Japan and 94% of Japanese groups listed in the Global Fortune 500. Its offices are located in 17 cities in Japan, which enables the tax team to closely work with clients across the nation.
Deloitte has had an alliance with Japanese professional law corporation DT Legal Japan since April 2015 which enables it to assist clients in broader basis combining tax and legal ability.
Head of tax and transfer pricing at DLA Piper Makiko Kawamura represents various multinationals in respect of international tax including tax structuring, tax advisory and tax dispute as well as M&A. Kawamura is the sole partner in the practice and is supported by three other professionals.
The firm provides manifold tax services incorporating national and international knowledge in tax, economics and a range of different industries. The services offered include global alignment and integration, global equity compensation, international tax counsel, tax controversy and disputes, transactional tax planning, transfer pricing and VAT and custom duties.
Kawamura represented a corporation being audited by Tokyo customs regarding customs valuation for import consumption tax and providing transfer pricing analysis with respect to a toiya arrangement. The customs valuation methodology for toiya arrangements has not been firmly established and there were many issues new to the Tokyo customs. Kawamura went through a complex process interpreting the laws and regulations in a way to persuade the Customs where few guidelines and precedents were available.
EY ShinNihon Tax is overseen by the managing partner and the Japan tax leader Kenji Amino. The firm's tax team comprises 37 partners and over 500 professionals working on various tax issues around the region and globally. The tax team is recognised for providing real-time and whole tax support for international corporations in Japan.
The firm boasts specialised team members with deep insights in different industries including a number of economists and professionals. In response to the changes to tax environment at a global level, the demands for tax advisory works have continued to increase and the firm helps clients uncover opportunities, manage global tax risks, meet cross-border reporting obligations, advise structuring alternatives and deal with transfer pricing issues.
The firm runs a series of global tax update seminars every month highlighting one or two particular countries in each session to provide Japanese multinational clients with the latest tax information and trends in the countries where they operate their business.
Yoichi Ishizuka is the head of international tax team of Grant Thornton. The firm's tax team includes 11 partners and 100 other fee earners. The team added two former tax authority workers as tax professionals.
The firm's tax practice offers services covering domestic and international tax, transfer pricing advisory services, expatriate employment and remuneration services, China tax and business advisory services, real estate, corporate and private client consultation.
Manufacturing, computers related software and online services, technology, media and telecommunications (TMT) and financial services are the most important industries for the firm.
The team worked on the global tax governance structure project for a Japanese electronic products manufacturing company and a Japanese cosmetics manufacturing company as they prepared for the impacts of the BEPS Project.
Ishizuka said establishment of global tax governance structure in Japan requires more tax professionals and Japanese tax firms are supporting those large corporates in various ways through engagement projects as they do not have sufficient resources to date.
Jones Day's tax practice assists various clients with creative, technical and practical solutions in regards of all sorts of tax matters arising from shifting and challenging tax environment globally. The practice is headed by Koichi Inoue, who has decades of experience in international transactions, investments, and dispute resolution. He has strong expertise in particular industries such as manufacturing, TMT, real estate, pharmaceuticals, financial services and computer and software services.
The firm offers a wide variety of tax services including bankruptcy taxation, exempt organisations, international tax, M&A tax, private equity and real estate, state and local tax, structure finance tax, tax audits and controversies, tax credit transactions and wealth management.
Eiki Kawakami is the leader of Kojima Law, Taxand Japan's tax department, which also covers transfer pricing. The team consists of four partners and 11 other tax practitioners including lawyers and tax accountants. Kawakami joined the firm in 2007 and specialises in international tax advisory including transfer pricing, withholding tax, expatriate issues, supply chain management, tax audit counselling and tax litigation.
The firm specialises in developing tax strategies for international clients to optimise their Japanese operations including not only corporate tax but also withholding tax and consumption tax advisory. The dedicated team serves clients with a variety of tax services including international tax, litigation, transfer pricing, transactional tax, compensation, real estate and corporate tax compliance.
Kawakami and other professionals provided technical analysis regarding the amended VAT law which was required for evaluating its impact on various clients over the year.
KPMG in Japan, led by Yuichi Komakine, comprises 42 partners and 473 tax professionals.
The team specialises in the areas of transfer pricing, financial services, M&A and real estate investment. The team works with both inbound and outbound multinationals in a wide spectrum of industries.
KPMG has established a specialised team in finance and technology (FinTech) to support both traditional financial institutions as well as new types of IT companies as a result of emerging business models via rapid technological change which requires companies to develop capabilities beyond their traditional service offering. The team also supports clients in the social media, new media and entertainment industries.
In 2015, the firm was involved in many large Japanese real estate transactions and renewable energy projects.
Real estate, financial services, Japanese trading companies, technology including media and telecommunications, computers and digital related services, leasing, pharmaceuticals are the main industries the firm advises on.
Komakine led a global strategic tax governance project with a large Japanese manufacturing company in November 2015. The work had a substantial effect on the company's administration policy itself and at the same time became a positive example for other Japanese multinationals to follow.
Mori Hamada & Matsumoto, which is led by Atsushi Oishi, comprises nine partners and seven professionals. Koyo Madokoro joined the firm, moving from Asahi Tax Corporation, this year.
The firm's tax practice mainly focuses on tax planning for both corporate and individual clients as well as tax disputes and litigation practices. Its litigation practice includes handling a number of tax disputes between taxpayers and tax authorities in Japan and assisting taxpayers at the initial stage of tax investigations to improve its strategies in dealing with officials.
The team operates a wealth management practice which assists clients with estate planning and related services, in addition to giving advice on M&A, corporate reorganisations and cross border transactions.
Oishi and a partner Makoto Sakai advised on designing an optimal deal structure of a Japanese aluminium manufacturer, UACJ Corporation, which acquired SRS Industries, a US manufacturer of automotive aluminium structural materials and various aluminium components, carrying out legal, tax and financial due diligence.
Nagashima Ohno & Tsunematsu is a law firm providing international and commercial legal services in Japan including tax services. Both the tax and transfer pricing practices are headed by Yuko Miyazaki, who is nationally recognised and frequently praised by other practitioners for her outstanding knowledge and ability in tax. The team comprises five partners, five associates, one senior counsel and one other adviser.
Miyazaki has more than 30 years of experience in the legal field advising global corporations based both in Japan and abroad on corporate matters. She has strong international tax and financial transaction experience including in cross-border business transactions, restructuring, planning, advance pricing arrangements (APAs) and mutual agreement procedures (MAPs) as well as representing clients in tax audits, disputes and litigations.
The firm covers most industries, mainly working in the computers and digital services, financial services, agriculture and fast moving consumer goods (FMCG), healthcare, manufacturing, and technology and media sectors.
Miyazaki represented a Japanese holding company of IBM Corporation in tax litigation, securing a full victory in favour of the client and cancellation of $4 billion assessments. This case was innovative because the amount at stake was extremely large, and the case involved application of the anti-avoidance statute under Japanese corporate tax law.
Nishimura & Asahi has ten partners and specialises in tax. Masakazu Iwakura manages a variety of high-profile tax, M&A, intellectual property, and insurance and litigation matters. Kazuhiro Takei Yo Ota and Akihiro Hironaka are experienced in all aspects of tax law including corporate tax, international tax, and tax disputes.
The key industries the firm's tax practice advises are banking and financial services, real estate, investment companies, healthcare, insurance, manufacturering and telecommunications.
PwC Tax Japan boasts nearly 500 professionals focusing on all-round tax matters including 40 partners. The tax practice is managed by Kazuya Miyakawa, who is the CEO of the firm, and mainly focuses on tax matters related M&A, organisational restructuring and international transactions for multinational companies.
The firm provides a full suite of tax services including tax management and accounting services, global tax management, financial services, real estate, M&A, transfer pricing, international assignment services, customs duties, and business start-up and outsourcing services.
The tax group covers various industries and retains industry-specific specialists to provide advanced solutions to sector-specific challenges including automotive, banking and capital markets, capital projects and infrastructure, chemicals, communications, energy and utilities, financial services and insurance.
In terms of new partners, the firm has admitted five partners since July 2015: Nobuko Yamashita (corporate tax), Takashi Murakami (corporate tax), Satoshi Matsunaga (financial services), Takeki Nagafuji (transfer pricing) and Kenji Nakamuta (transfer pricing).
Ryutaro Uchiyama heads the tax and transfer pricing practices of Tokyo Kyodo Accounting Office. The tax practice comprises seven partners and 24 other professionals.
The firm's tax practice group offers services on the full spectrum of accounting and tax advisory services in relation to international trade and cross-border investments including financing transactions such as solar power and wind power and investment transactions like real estate, private equity and solar. The team also advises on various estate planning projects involving overseas jurisdictions, corporate reorganisations and indirect tax planning.
The main industries for the firm's tax team include financial services, energy and natural resources, manufacturing, transportation and retail.
One of the firm's most notable tax matters, completed at the end of 2015, concerned a corporate reorganisation after an acquisition of a Japanese investment company. This transaction enabled the Japanese investment company to utilise its net operating losses for offsetting capital gains to be realised upon disposition of real estate assets.
Eric Roose heads Withers Japan Zeirishi Houjin's international corporate tax practice in Asia and is also head of tax for Japan. The firm opened in June 2015 assisting wide variety of clients with Japanese and international tax matters. Roose joined the firm from this October, bringing with him a reputation for international tax planning matters and corporate tax advisory work. The two other partners, Chizuko Tomita and Takeo Mizutani, who joined from Morrison & Foerster, are in charge of the tax practice in Tokyo.
Roose is a recognised speaker at international tax conferences including the Asia Pacific Regional Tax Conference 2015 and Tax Academy of Singapore.
The department collaborates closely with five regional offices (Tokyo, Hong Kong, Singapore, Sydney and Melbourne) in the Asia-Pacific region to advice on cross-border transactions, particularly corporate tax advice.
Roose, Tomita and Mizutani have been working on the tax-free restructuring of a Japanese public company in the relocation of substantial positions of its business and executive functions to the UK this year.
The firm has hired two new advisers, Jonathan Blaine, the former international and US tax lawyer from Baker McKenzie and Mahesh Kumar, the former head of corporate tax at Nisith Desai in Singapore in Bangkok, strengthening its team to contain a total of 12 advisers.
|Tier 1- Japan|
|Baker & McKenzie|
|Deloitte Tohmatsu Tax|
|EY ShinNihon Tax|
|PwC Tax Japan|
|Tier 2- Japan|
|Mori Hamada & Matsumoto|
|Nagashima Ohno & Tsunematsu|
|Nishimura & Asahi|
|Withers Japan, Zeirishi Houjin|
|Tier 3- Japan|
|Tokyo Kyodo Accounting Office|
|Tier 4- Japan|
|Kojima Law, Taxand Japan|