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1. Accounting(Sales with a right of return)

The following discussion has taken place in the ASBJ. According to IFRS No. 15, the portion of sales with a right of return for a total transaction price is not recognized as revenue since this portion does not come under an amount of value of which an entity expects the right. Japanese accounting standards have a regulation of allowance for sales returns.

If an entity expects sales returns, revenue is recognized at the time of sale and an allowance for sales returns is made. When the sales return occurs, the revenue is decreased. Most entities report a provision for an allowance as an adjustment item for gross profit. IFRS No.15 requires measuring the revenue amount with a transaction price. In other words, business practice in accordance with Japanese standards is not consistent with the principle set out in IFRS No.15.

2. Tax

Under the 2016 tax reform, the additional tax treatment for national tax returns with the deadline on or after January 1st 2017 has been changed. Regarding the main item of this reform, additional tax for understatement (at a rate of 5%) or additional tax for no return (at a rate of 10%) is imposed if the tax payer files the revised tax return or tax return after the deadline from when tax payer has received the notice of tax investigation to when tax payer foresees the possibility of request for corrections due to that investigation. Also, malicious tax payers, who file after the deadline multiple times or file tax returns by hiding and/or disguising facts repeatedly, will have a penalty of 10% in addition to the usual one of 35 or 40%.

Additionally, the Japanese tax code has adopted self-assessment system for main tax items and has stipulated that tax amounts are fixed by filing tax returns. Since it is thus highly important to file the correct tax return by the deadline in accordance with the Japanese tax code, tax payers need to be fully aware that an especially heavy penalty is imposed for failure to file a return in time and for filing false returns.

3. Labor Management(Efforts toward “No One Forced to Leave Their Jobs for Nursing Care”)

The Ministry of Internal Affairs and Communications has publically announced that the proportion of people in Japan aged 65 or older has reached 26.7%. Also, the Japanese government has announced a plan to achieve the “Realization of No One Forced to Leave Their Jobs for Nursing Care” as one of the three pillars of their policy.

The Child Care and Family Care Leave Law stipulates that, as a “leave to take care of eligible family members who are in a care-requiring condition”, a worker can take up to 93 days of Family Care Leave per one eligible family member. The law considers the 93 days as a period for a worker to prepare for providing long-term care by developing a long-term care plan, arranging care-giving services or discussing the plan with other family members, so that the worker will be able to continue to work while taking care of the care-requiring family member. The law also provides Time Off for Family Care, which is a short-term leave system, and Family Care Leave Benefits, etc.

A lot of workers, especially those in their 40’s and 50’s who are experienced and productive for society have to quit their jobs to care for family members. We should utilize these public programs efficiently.

Sources: Ministry of Health, Labor and Welfare website, “Balancing work and family care – For prevention of job losses for family care”. Cabinet Public Relations Office, Cabinet Secretariat website, “Japan’s Plan for Dynamic Engagement of All Citizens

4. This Week’s Words of Wisdom(Change myself)

“Everyone thinks of changing the world, but no one thinks of changing himself. ” (Tolstoy)

Mr. Trump is a typical example of this. He should have lost weight before changing America.

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

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