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Be wary of your investments -- the TAXMAN is watching

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  • You relied on the English version????????????

    Christ man, you're starting to sound like a classic Been Too Long Whiner.

    Either use the Japanese version, or get somebody else to read it for you.


    One version counts as law.


    Wanna bet which one it is???

    Comment


    • Originally posted by kurogane View Post

      One version counts as law.


      Wanna bet which one it is???
      Actually I don't think either count as law or anything close - It's just an annual report.

      Not a lot new I agree. A few gobbets I found interesting:

      1. About 1 in 20 ie 5% taxpayers gets investigated every year.

      2. International income is much a higher priority for action than it was. That looks set to continue. There is a specialist department and staff deployed all over the country plus training in place to increase the tax take form foreign income. This will continue.

      3. They say they are after corporations and wealthy individuals. However, the average recovery per case, including penalties, as about 8,000,000 Yen. This, to me, means a potential liability of about 2,000,000 makes you a potential target. Much less than that and you are unlikely to be a priority.

      4. Japan is very keen to exchange information and work closely with overseas tax authorities. This includes sharing of real time information and permanent staff based in Washington and London working for an organisation called JITSIC which sounds like the main tool at their disposal when it comes to taxing earnings in another country. JITSIC was created by The UK, Canada, The USA and Australia for exactly this purpose. There isn't a lot of information about what they do but it looks like the efficient, cheap and quick sharing of individual taxpayer's information is their main brief. Japan joined it within a year. As of 2010 China, France, Germany and the Republic of Korea were on track to join. There is some indication that is as big as it is going to get - It is intended that it serves as a model for other groups of countries who share common concerns and issues. A bit more here:

      http://www.businessifc.com/articles/...x-years-on.htm

      5. The OECD also has groups and a framework for exchanging information. Japan is closely involved in that too.

      Comment


      • A fair point, that.

        But people, I implode you:

        either read the Japanese version, have it read to you, or, even better, seek qualified, professional help.

        The Rugged Individualists (SoopGroove excluded, natch!) that insist on manging their own tax strategies based on the available English information should be seeking professional help of a different sort.


        BTW, this pirsuit of foreing income and holdings information seems a pan-Neoconosphere thing.

        Now that their Good Friends have got their horses out of the barn and hidden down in the foggy vales, they want to get all they can from the people that don't fund their machinatory nefariousness.


        I'm starting to think Fred Eaglesmith was only half wrong.

        Comment


        • Originally posted by Brown Cow View Post
          Actually I don't think either count as law or anything close - It's just an annual report.

          Not a lot new I agree. A few gobbets I found interesting:

          1. About 1 in 20 ie 5% taxpayers gets investigated every year.

          2. International income is much a higher priority for action than it was. That looks set to continue. There is a specialist department and staff deployed all over the country plus training in place to increase the tax take form foreign income. This will continue.

          3. They say they are after corporations and wealthy individuals. However, the average recovery per case, including penalties, as about 8,000,000 Yen. This, to me, means a potential liability of about 2,000,000 makes you a potential target. Much less than that and you are unlikely to be a priority.

          4. Japan is very keen to exchange information and work closely with overseas tax authorities. This includes sharing of real time information and permanent staff based in Washington and London working for an organisation called JITSIC which sounds like the main tool at their disposal when it comes to taxing earnings in another country. JITSIC was created by The UK, Canada, The USA and Australia for exactly this purpose. There isn't a lot of information about what they do but it looks like the efficient, cheap and quick sharing of individual taxpayer's information is their main brief. Japan joined it within a year. As of 2010 China, France, Germany and the Republic of Korea were on track to join. There is some indication that is as big as it is going to get - It is intended that it serves as a model for other groups of countries who share common concerns and issues. A bit more here:

          http://www.businessifc.com/articles/...x-years-on.htm

          5. The OECD also has groups and a framework for exchanging information. Japan is closely involved in that too.
          All seems fair and reasonable. I'd be quite happy to be audited.

          Comment


          • Recommendations for Large/Mid-sized Accounting Firms

            Well, I just passed the five year mark...

            Anyone have recommendations for large/mid-sized accounting firms for help with individual tax filing in preferably Kansai or otherwise Tokyo?

            I turned up Tokyo Consulting Group (http://www.kuno-cpa.co.jp/tcf/japan/..._services.html) after a quick search, but other options, especially in Kansai, would be great.

            (Ifm seeking a mid-sized/large firm as opposed to a single Certified Public Tax Accountant on the recommendation on my accountant in the US, given that I have a diverse array of investments split between several investment firms and a larger firm may be better equipped to deal with that complexity.)

            Thanks!

            Comment


            • Originally posted by torono View Post
              Well, I just passed the five year mark...

              Anyone have recommendations for large/mid-sized accounting firms for help with individual tax filing in preferably Kansai or otherwise Tokyo?

              I turned up Tokyo Consulting Group (http://www.kuno-cpa.co.jp/tcf/japan/..._services.html) after a quick search, but other options, especially in Kansai, would be great.

              (Ifm seeking a mid-sized/large firm as opposed to a single Certified Public Tax Accountant on the recommendation on my accountant in the US, given that I have a diverse array of investments split between several investment firms and a larger firm may be better equipped to deal with that complexity.)

              Thanks!
              You might want to get someone who has experience filling US taxes... If you want a Japanese tax accountant you can get it done for free at the ward office and the service is still the same. Japanese drone syndrome is applied... so be prepared for teeth sucking and one way roads of doing stuff. It is quite simple to file for multiple investment firms, big or small, and getting a Japanese person behind this will just complicate everything.

              Just my 2 yen, but if you are head strong on dealing with them... best of luck!

              Comment


              • Originally posted by IparryU View Post
                You might want to get someone who has experience filling US taxes... If you want a Japanese tax accountant you can get it done for free at the ward office and the service is still the same. Japanese drone syndrome is applied... so be prepared for teeth sucking and one way roads of doing stuff. It is quite simple to file for multiple investment firms, big or small, and getting a Japanese person behind this will just complicate everything.

                Just my 2 yen, but if you are head strong on dealing with them... best of luck!
                Thanks for the advice. To better explain my situation, for the last few years, I have been working as a self-employed translator, so I've worked with a Japanese tax accountant at the local city office to file a blue return. While there was a small learning curve my first year filing, it wasn't really a big deal.

                However, I don't even want to think about how much it would take to work with someone at the city office to file taxes for my worldwide income. Due to a substantial amount of inherited wealth, with investments in everything from bonds to private equity, my 2011 US federal tax return was about 150 pages. I don't have the time or patience (and I'm a patient guy) to work with the local office to try to sort all of that out. Also accounting is just not my thing. My plan (as recommended by my accountant in the US) is to take last year's US tax return to a large accounting firm that has experience with both Japanese and US taxes, provide them with whatever other info they need, and pay them to take care of it. After finding a few different places from recommendations or just Google searches, I plan on getting rough quotations from two different firms.

                Comment


                • Anybody has more information about the new law/regulation that comes into effect in 2014 regarding the declaration of all your assets in your annual tax return, if the exceed 50 MJPY (or something)? It was mentioned in this thread a couple of month ago, but the details were not clear.

                  Comment


                  • Originally posted by torono View Post
                    However, I don't even want to think about how much it would take to work with someone at the city office to file taxes for my worldwide income. Due to a substantial amount of inherited wealth, with investments in everything from bonds to private equity, my 2011 US federal tax return was about 150 pages. I don't have the time or patience (and I'm a patient guy) to work with the local office to try to sort all of that out. Also accounting is just not my thing. My plan (as recommended by my accountant in the US) is to take last year's US tax return to a large accounting firm that has experience with both Japanese and US taxes, provide them with whatever other info they need, and pay them to take care of it. After finding a few different places from recommendations or just Google searches, I plan on getting rough quotations from two different firms.
                    I am in a similar situation. My income from sources abroad is exceeding my employee income in Japan. I have to file here in Japan every year, and I am using for 20 years now a Japanese accountant. In a way I am lucky, because my country has a tax treaty with Japan that stipulates if I live in Japan, I don't have to pay any tax (with a very few exceptions) in my home country. However, for the tax return in Japan (including twice a year tax pre-payments!) it's impossible, even if you have enough time and are as business person familiar with the basic principles, if you have multiple income sources, such as from real estate, interest, capital gains, and other financial instruments to do the return by yourself, The problem I found is that even if you use a foreign company like Earnest and Young, their Japanese accountants follow the Japanese "ethic" to be servant of the tax law. That's totally different from the way tax consultants in other countries work. It took me several years until I found a company that is actually advising me how to avoid some or reduce taxes. The traditionally Japanese tax accountant will not do this. Their understanding is that their client has to file as correct as possible, and not that he should pay as little as possible.
                    Last edited by chainbolt; 2012-11-30, 09:33 AM.

                    Comment


                    • Originally posted by Brown Cow View Post
                      1. About 1 in 20 ie 5% taxpayers gets investigated every year.
                      Investigate means what? Someone at the local tax office is checking randomly a certain number of returns for consistency? But could they actually "audit" as we discuss it in this thread every year 5% of all taxpayers? I think this is not possible, not even remotely.

                      3. They say they are after corporations and wealthy individuals. However, the average recovery per case, including penalties, as about 8,000,000 Yen. This, to me, means a potential liability of about 2,000,000 makes you a potential target. Much less than that and you are unlikely to be a priority.
                      I also saw this. But how do you come by this to the conclusion that people with a tax liability of above 2,000,000 JPY become a target? That would put already people with an income of around 8,000,000 JPY into the bracket. By the information posted in this thread form various sources (articles and tax consultants), it seems the threshold is far higher than this.
                      Last edited by chainbolt; 2012-11-30, 10:50 AM.

                      Comment


                      • Originally posted by chainbolt View Post
                        Anybody has more information about the new law/regulation that comes into effect in 2014 regarding the declaration of all your assets in your annual tax return, if the exceed 50 MJPY (or something)? It was mentioned in this thread a couple of month ago, but the details were not clear.
                        I was just reading a Japanese article about it yesterday.
                        http://diamond.jp/articles/-/27126

                        Briefly, the article goes into the presumed reason for the requirement being introduced, and problems with the implementation of it. The article does a good job of making it sound like a pretty dumb system.

                        I gather that the definition of "foreign assets" for reporting has been poorly thought out.

                        Of course, foreign assets held overseas are supposed to reported.

                        However,

                        1) Foreign assets bought through a Japanese financial institution (which are accordingly taxed at the source and reported to Japanese authorities) still need to be reported.

                        2) On the other hand, Japanese assets bought through a foreign financial institution (which does not tax at the source) are not required to be reported.

                        One can imagine that both these features should have the unintended side-effect of hitting profit margins at financial institutions operating in Japan. 1) the wealthy will be less likely to go through the hassles of buying foreign assets via Japanese institutions due to the reporting requirements, and 2) the wealthy who wish to evade taxes on Japanese assets will seek to invest in them via foreign institutions rather than domestic ones.

                        The NTA could potentially take in less in tax revenues as a result of damage done to the financial sector?

                        Comment


                        • Originally posted by chainbolt View Post
                          I am in a similar situation. My income from sources abroad is exceeding my employee income in Japan. I have to file here in Japan every year, and I am using for 20 years now a Japanese accountant. In a way I am lucky, because my country has a tax treaty with Japan that stipulates if I live in Japan, I don't have to pay any tax (with a very few exceptions) in my home country. However, for the tax return in Japan (including twice a year tax pre-payments!) it's impossible, even if you have enough time and are as business person familiar with the basic principles, if you have multiple income sources, such as from real estate, interest, capital gains, and other financial instruments to do the return by yourself, The problem I found is that even if you use a foreign company like Earnest and Young, their Japanese accountants follow the Japanese "ethic" to be servant of the tax law. That's totally different from the way tax consultants in other countries work. It took me several years until I found a company that is actually advising me how to avoid some or reduce taxes. The traditionally Japanese tax accountant will not do this. Their understanding is that their client has to file as correct as possible, and not that he should pay as little as possible.
                          THIS

                          @Torono:
                          The difference between a "big" accounting firm and a "small" accounting firm is the person that manages your account... the "big" firm (in Japan) has drones that work like chainbolt had stated and don't really care about reducing your taxes... the "small" firm has a few people that will jump through hoops to keep your account and will do their best to make you happy.

                          Also keep in mind that the "small" firms are ran by some guy/gal who worked at a "big" firm and wanted out of that cesspit.

                          Comment


                          • Originally posted by chainbolt View Post
                            Investigate means what? Someone at the local tax office is checking randomly a certain number of returns for consistency? But could they actually "audit" as we discuss it in this thread every year 5% of all taxpayers? I think this is not possible, not even remotely.
                            Who knows - That's, I think, the word they used in their annual report. I suppose it might be quite broad. They take a look at one in twenty taxpayers. Then the usual audit rules apply. You check a sample of things. If it all looks fine you sign it off. If you find something that doesn't look quite right you dig deeper.


                            I also saw this. But how do you come by this to the conclusion that people with a tax liability of above 2,000,000 JPY become a target? That would put already people with an income of around 8,000,000 JPY into the bracket. By the information posted in this thread form various sources (articles and tax consultants), it seems the threshold is far higher than this.
                            I think my logic, flawed as it may well be was something like this:

                            " They say they are after corporations and wealthy individuals. However, the average recovery per case, including penalties, as about 8,000,000 Yen. This, to me, means a potential liability of about 2,000,000 makes you a potential target. Much less than that and you are unlikely to be a priority."

                            Average tax recovered per case, including penalties, 8,000,000 Yen. That is an average figure and they claim to be after the big big fish so there must be a fair number of cases well under 8 million. 2 million as a cut off point was just an guesstimate.

                            Also bear in mind that it is not 8 million including penalties for one tax year but for all the tax years that are examined. Typically what? 3 years maybe? 5 years?

                            An overseas income of 8 million a year would, I would guess, clearly put you in the frame. Certainly the experience of the people who have posted here would strongly support that view. It has happened to them.

                            Comment


                            • Originally posted by Brown Cow View Post
                              ....An overseas income of 8 million a year would, I would guess, clearly put you in the frame. Certainly the experience of the people who have posted here would strongly support that view. It has happened to them.
                              Yes, but they were likely audited because a financial transaction or transactions caught the attention of NTA and not because of a random audit.

                              Many gaijins simply donft earn enough to warrant such attention.

                              Comment


                              • Originally posted by Ken44 View Post
                                Yes, but they were likely audited because a financial transaction or transactions caught the attention of NTA and not because of a random audit.

                                Many gaijins simply donft earn enough to warrant such attention.
                                I really have no idea. They (The NTA) don't share that information very freely or indeed at all. However it's worth remembering that IT changes everything.They have access to real time tax data from the countries we have discussed. It doesn't take a lot of effort and time to tap someone's name into a computer and see how that squares with the numbers they have declared on their tax return.

                                They are tasked with collecting as much tax as possible. Their targets and bonuses depend on it. A liability of (say) 2,000,000 Yen over 5 years would imply an overseas income (or gifts/inheritances) of about 2,000,000 per year. No small amount I agree, but not unheard of.

                                Comment

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