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1. Accounting(Fourth accounting standard, JMIS)

The Accounting Standards Board of Japan (ASBJ) issued “Japan’s Modified International Standards(JMIS): Accounting Standards Comprising IFRSs and the ASBJ Modifications” on June 30. JMIS are constructed by (1)the application of JMIS, (2)the Standards issued by the IASB and adopted by the ASBJ, and (3)the ASBJ Modification Accounting Standards.

(3) is a deletion or modification of the regulations of IFRS / IASB relevant to two items: “Accounting for goodwill” and “Accounting for other comprehensive income”, that are critically different from the fundamental thinking on accounting standards generally accepted in Japan. The application of JMIS is from the annual periods ending on or after 31 March 2016.

Also, the Financial Services Agency published a draft revision of the Regulations for Consolidated Financial Statements on the same day so that the application of JMIS becomes possible on the system.(Souce:“Keiei Zaimu Magazine”No.3219)

2. Tax (Revision of the consumption tax law (change of the taxation system concerning the provision of digital content, etc.))

In accordance with the 2015 Tax Reform, when an individual or a corporation that is a business of abroad (hereinafter referred to simply as “foreign business”) provides certain service such as provision of digital content etc. (hereinafter referred to as “provision of electronic services.”) to a resident or a domestic corporation of Japan, the provision of electronic services is to have consumption tax imposed on it in Japan.

The provision of electronic services provided by a foreign business is classified into two groups: either “provision of B2B (business-to-business) electronic services” or others (hereinafter simply referred to as “the provision of B2C (business-to-consumer) electronic services”). As for the provision of B2B electronic services, a Japanese business who receives the electronic services from a foreign business is subject to consumption tax under a “reverse charge mechanism”. On the other hand, when a foreign business provides B2C electronic services, the foreign service provider is liable to file and pay consumption tax. A foreign business is required to designate a Tax Agent in Japan to deal with its consumption tax payment in Japan.

Additionally, Japanese businesses receiving B2C electronic services provided by a foreign business can claim a purchase tax credit if the foreign service provider has met certain requirements such as having an office or place of business in Japan, and has submitted the correct application for registration to the National Tax Agency.The reform will be applied on or after October 1, 2015 and foreign businesses are able to apply for the above registration starting from July 1, 2015.

3. Labor Management(Proposed Amendment to the Labor Standards Act: Encouraging Employees to Take Annual Paid Leave)

“The Outline of a Bill to Revise a Part of the Labor Standard Act, etc.” is expected to go into effect (partially) on April 1, 2016 after going through Diet deliberations this year.

The outline includes provisions for encouraging employees to take annual paid leave, stipulating that “when an employee is entitled to at least 10 days of annual paid leave, the employer must grant 5 days of such annual paid leave by specifying the dates in advance, within 1 year after such annual paid leave is granted (a period of 1 year segmented by a reference date). However, the employer is not required to specify the dates of annual paid leave when the dates are already specified by the employee, or when annual paid leave is granted pursuant to the company’s Planned Annual Paid Leave System.”

Employers should plan and prepare for dealing with an increase in the administrative work for granting annual paid leave, and for covering the work of employees on leave. (Souce:“the Outline of the Act for Partial Revision of the Labor Standard Act, etc.” Ministry of Health, Labor and Welfare)

4. This Week’s Words of Wisdom

This Week’s Words of Wisdom is not appearing in this issue.

The referring page is Nagamine & Mishima JC Accounting K.K.

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