October featured business affairs

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1. Accounting(Development of New Accounting Standard for Financial Instrument)

In order to make Japanese accounting standards internationally consistent, the ASBJ will develop an accounting standard for financial instruments.

By developing this new accounting standard, the ASBJ expect that they can establish consistency with international accounting standards which were reformed after the financial crisis. Also, it can improve the possibility for comparison between the financial statements of domestic and foreign companies.

On the other hand, the ASBJ expects companies to face difficulties if this new accounting standard is reformed.
Therefore, they will invite suggestions to help understand the difficulties that reform could cause and they will shape procedures of progress before determining whether or not to develop this standard.
The main points will be the “Classification and measure for financial instruments”, “Impairment for financial instruments” and “Hedging accounting”.

2. Tax

Since accounting standards on revenue recognition reflected in “Revenue from Contracts with Customers” (IFRS) released by the IFRS has been applied from the fiscal year beginning April 1st, 2018, the corporate tax code has been reformed to accept this accounting standard in principle.

This makes the corporate tax code consistent with the accounting standard except for some conservative treatment in view of taxation on corporations.

On the other hand, since the consumption tax code has not been reformed to accept this standard, accounting treatments with the standard are mostly expected to not be consistent with the consumption tax code.
Therefore, if a company introduces the standard, it needs to establish the manner to compile the consumption tax in advance.
Small and medium enterprises can utilize prior accounting treatment without utilizing the standard. In this case, the treatment on corporate and consumption tax codes remain as they previously were.

3. Labor Management (Lump-sum Withdrawal Payment)

A foreign employee who covered by Japanese Pension Insurance may claim a lump-sum withdrawal payment if he/she satisfies all of the conditions below when leaving Japan:
1. The person does not have Japanese nationality.
2. The person was covered by the Japanese National/Employees’ Pension Insurance for six months or more.
3. The person no longer has a registered address in Japan.
4. The person has never been entitled to Japanese public pension benefits including Disability Allowance.

Previously, the payment could only be claimed after the departure date. From March 2017, if a person submits a Moving-Out Notice to their municipality, they can submit the claim from within Japan after their “(Scheduled) Departure date” registered with the municipality.

Now that the total contribution period required for pension eligibility has been shortened from 25 to 10 years, it is worth considering whether to receive the Japanese pension benefits or to receive the withdrawal payment.
(Source: Japan Pension Service website “Lump-sum Withdrawal Payments”)

4. This Month’s Words of Wisdom

Man is not made for defeat.
(Ernest Hemingway)

While I think this is to be encouraged, I also feel that this is ironic coming from Hemingway.

For more details, please refer to Nagamine & Mishima JC Accounting K.K.

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