{"id":473,"date":"2012-10-11T10:18:31","date_gmt":"2012-10-11T01:18:31","guid":{"rendered":"http:\/\/tk-tax-accounting.com\/?p=473"},"modified":"2024-05-25T02:20:04","modified_gmt":"2024-05-25T02:20:04","slug":"english-starting-a-business-in-japan-blue-tax-return-for-income-tax","status":"publish","type":"post","link":"https:\/\/www.tkpartners.or.jp\/en\/english-starting-a-business-in-japan-blue-tax-return-for-income-tax\/","title":{"rendered":"Starting a business in Japan \u2013 Blue tax return for Income Tax"},"content":{"rendered":"

Case 9<\/p>\n

<Question>
\nI will start a business as a solo trader (without establishing a company). I know that Income Tax is supposed to be imposed on \u00a0 \u00a0\u00a0business income but I heard that a tax benefit called\u00a0the deduction for blue tax (Aoiro Shinkoku Kohjo) is possible\u00a0by submitting the blue tax application form. Could you tell me the requirements for receiving this tax benefit?\u00a0<\/p>\n

<Answer>
\nWhen solo traders start a business in Japan, they can take advantage of income deduction by filling out the blue tax deduction application form (Please refer to \u201cStarting a business in Japan 18\/08\/2012<\/a>\u201d).<\/p>\n

Income tax is categorized into\u00a0several incomes: rental income, business income or forestry income, for example. These are possible incomes that can take advantage of the deduction. The authority requires the following for the blue tax return.<\/p>\n

1.\u00a0\u00a0\u00a0 Filing the application form by March 15.
\n2.\u00a0\u00a0\u00a0 Filing the application form within 2 months if taxpayers start a business\u00a0\u00a0from January 16 of that year.
\n3.\u00a0\u00a0\u00a0 The taxpayers have to keep correct accounting records and journals.\u00a0<\/p>\n

If the taxpayers meet the above requirements, the blue tax return provides the tax payers with the following benefits.<\/p>\n

1.\u00a0\u00a0\u00a0 A deduction of up to JPY 650,000 is available if the taxpayers maintain double-entry accounting records and include an income statement and balance sheet as an attachment on\u00a0\u00a0 their return.
\n2.\u00a0\u00a0\u00a0 Deduction of up to JPY 100,000 is available if the taxpayers maintain some form of accounting records.
\n3.\u00a0\u00a0\u00a0 A net loss for a year can be carried back to the preceding year and deducted from the income of that year. The taxpayer may qualify for a refund of Income Tax, if any was paid for that year.
\n4.\u00a0\u00a0\u00a0 A net loss for a year can be carried forward to the next 3 years.
\n5.\u00a0\u00a0\u00a0 Immediate right of appeal to the National Tax Tribunal with no requirement to first request a further investigation from the tax office.<\/p>\n

JPY 100,000 deduction is available by maintaining some form of accounting records, however, it is unclear what kind of accounting records should be prepared. \u00a0Double-entry accounting records are not necessary though, at the least, preparing spread sheets which show revenue, expenditure and cash balance is\u00a0necessary to receive this benefit.<\/p>\n

 <\/p>\n

Reference
\nStarting a business in Japa<\/a><\/span>n – Business operation\u00a0 25\/10\/2012
\nStarting a business in Japan \u2013 Opening bank accounts and borrowing money 28\/09\/2012<\/a>
\nStarting a business in Japan \u2013 Tax merit (a corporateor an individual owned business?) 10\/09\/2012<\/a>
\nStarting a business in Japan \u2013 Consumption tax 03\/09\/2012<\/a>
\nStarting a business in Japan 18\/08\/2012<\/a><\/span><\/p>\n

<\/p>\n

By Certified Public Accountant (CPA) & Tax Accontant, Koji Takahashi
\n<\/em>Tokyo & Yokohama<\/p>\n","protected":false},"excerpt":{"rendered":"

Case 9 <Question> I will start a business as a solo trader (without establishing a company). 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