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1. Accounting(Relationship between the Outline of Tax Revisions of 2018 and the Accounting Standard for Revenue Recognition)

The Outline of Tax Revisions of 2018, as a measure concerning the recognition of revenue in corporate tax,
(1)the amount of revenue to be recognized and
(2)the timing of recognition of revenue
were incorporated in the legislation.

The outline is developed on the previous tax rules and it describes how to accept processing new accounting standard for revenue recognition according to a company’s choice.
In addition, the reserve for losses on the returned goods unsold system has been abolished (transitional measures will be taken) as has the deferred payment basis related to long-term installment sales etc. for corporate tax and consumption tax.

2. Tax

The Outline of Tax Revisions in 2018, published in December 2017, declared that the revision to the following related rules to Permanent Establishment (PE) contents will be carried out:

(1)A person who, for the sake of non-resident person or foreign corporation (hereinafter referred to as “non-resident”), repeatedly concludes contract for the business of the non-resident or plays repeatedly a major role in the conclusion of certain types of contract will be included in the scope of an agent PE. In this context, the word “contract” means a contract which is related to the transfer of title of the assets owned by that non-resident.

(2)In the scope of independent agent will be excluded persons in Japan who act exclusively or almost exclusively on behalf of one or more non-residents who are closely related to that person. The word “non-resident(s) who is/are closely related to that person” in this context means a person who has relationship of direct or indirect shareholding ratio of more than 50% or other types of controlling/controlled relationship. (To be continued in our next issue)

Further, this revision is applied to the individual income tax for the 2019 calendar year or later and the corporate tax fiscal year starting on or after January 1, 2019.

3. Labor Management (Revision of Employment Security Act)

A revised Employment Security Act came into force on January 1st, 2018 to match the needs of job seekers and employers, and it is expected that this change will let those people connect properly and smoothly.

Under this revised Act, employers have to clarify their working conditions according to the following timing:
(1)At the time when employers post job openings.
As for conventional disclosure obligations, some items has been newly added which employers shall clarify and comply with.
(2)At the time before an employment contract is signed/sealed.
All job seekers are entitled to confirm their working conditions before they sign/seal their employment contracts to make sure that there is no difference from the contents above (1), and all employers have new disclosure obligations.

(Source: Leaflet about the 2017 revision of Employment Security Act which is for all the employers who recruit new employees, Homepage of the Ministry of Health, Labor and Welfare)

4. This Week’s Words of Wisdom

“Effort is not a means to lead us to happiness. Effort itself is happiness” (Tolstoy)

Many people say the same thing. Recently I saw Mr. Akira Takada, a founder of Japanet Takata, he said in the interview; “I think it is meaningless to think about the far future and we just need to live in the present. And I feel like our lives are in continuities.”

In other words, living one’s own life sincerely every day is the value of life.

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

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