Group Corporation Taxation
The wholly-owned subsidiary or sub-subsidiary in Japan of an overseas parent company with a stated capital of not less than 500 million yen is not entitled to the following tax-related special treatments which will be granted to companies classified under the Japanese Corporation Tax Act as small and medium sized enterprises.
1) Reduced Income Tax Rate The reduced income tax rate of 18% will not apply to taxable income up to 8 million yen, and the rate of 30% will apply instead.
2) Taxation on Reserve In the case of a corporation the Japanese company of which has a stated capital of not more than 100 million yen, taxation on the internal reserve of the company will be exempted. However, the wholly-owned subsidiary or sub-subsidiary in Japan of an overseas parent company with a stated capital of not less than 500 million yen will be subject to taxation on the reserve as follows.
- Amount of Tax Imposed on Reserve
＝ [Income, etc. − (Dividends + Corporation Tax, etc.) − Deduction from Reserve] × Special Tax Rate (*)
* Special Tax Rate
Amount of Taxable Reserve
Portion not more than 30 million yen: 10%
Portion more than 30 million yen but not more than 100 million yen: 15%
Portion more than 100 million yen: 20%