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1. Accounting(Effects on accounting due to 2016 tax reform: depreciation)

Facilities attached to buildings and structures acquired on or after April 1, 2016 are no longer allowed to use the declining balance method under corporate income tax law, which means they must be depreciated by the straight line method due to the 2016 tax reform.

The Accounting Standards Board of Japan (ASBJ) is discussing whether a change of depreciation method would be treated as the change in accounting policies with reasonable justification if the depreciation method applying to facilities attached to buildings and structures acquired on or after April 1, 2016 was changed to the straight line method in accordance with the 2016 tax reform.
A Practical Solution report will be announced later.

2. Tax

With regard to the renewed transfer pricing documentation, some accountants misunderstand a crucial point of the Local File which is being applied for fiscal years starting on or after April 1, 2017 as necessary documents to determine arm’s length prices in foreign controlled transactions.

Under the renewed Local File rules, business entities will be obligated to complete the Contemporaneous Documentation in principle.Cases where the total transaction amount with a foreign affiliated company in a previous fiscal year is less than 5 billion yen and the total transaction amount related to intangible assets with the foreign affiliated company is less than 300 million yen, however, are excluded from Contemporaneous Documentation about transactions with such foreign affiliated company. This does not mean these cases are excluded from transfer pricing documentation, only from Contemporaneous Documentation.

So even in cases that are excluded from Contemporaneous Documentation, a business entity is still subject to presumptive assessment or audit to similar business entities when the Local File is not filed within the period required by tax auditors. This period is a maximum of 60 days.

3. Labor Management(April 2016 Partial Amendments to Act on Promotion of Employment of Disabled Persons)

As partial amendments to the Act of Promotion of Employment of Disabled Persons, the following new policies came into effect from April 2016:
- Prohibition of discrimination against disabled persons in employment
- Obligation to provide reasonable accommodation
- Establishment of a consultation system
- Support for resolving grievances and disputes

The Act prohibits employers from discriminating against disabled persons in recruiting and hiring, determining wages, training and education and use of welfare facilities, and requires employers to take measures to ensure comfort and convenience for disabled persons in the workplace.

The Act also requires employers to make best efforts to resolve any grievances from disabled persons relating to the requirements above by establishing an in-house consultation system, etc. Furthermore, a special provision in the Act on Promoting the Resolution of Individual Labor-Related Disputes is provided to resolve relevant disputes through mediation by conciliation committees or administrative guidance/advice by the head of each prefectural Employment Bureau.
Source: Ministry of Health, Labor and Welfare website, “Outline of amendments to Act of Promotion of Employment of Disabled Persons”

4. This Week’s Words of Wisdom

“Do today’s daily settlement today.”(Doko Toshio, an executive)

This is surely a secret wise saying for living a worthwhile daily life. It sounds to me that you’d better carry out what you should do today before the day is over.



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

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