1. Accounting(Disclosure issue in the new revenue recognition standard)
The new revenue recognition standard prescribes that the same accounting treatment is applied to both individual financial statements and consolidated financial statements. However, another considerations are now being discussed in the ASBJ for related footnotes on individual financial statements.
The ASBJ prescribes in principle that the same accounting standards have been applied to both individual financial statements and consolidated financial statements equally. On the other hand, different accounting standards have been applied to individual financial statements and consolidated financial statements respectively only concerning the presentation of comprehensive income and unrecognized items under accounting for retirement benefits. The ASBJ expects that the same accounting standards should be applied to both individual financial statements and consolidated financial statements equally concerning the footnotes for the accounting standard for revenue recognition as well.
2. Tax(The Protocol Amending Tax Convention between Japan and the US coming into effect）
On August 30th 2019, the Protocol Amending the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income was entered into force between Japan and the US (hereinafter referred to as the “Amending Protocol”). The Amending Protocol will be applied to withholding taxes from November 1st 2019 and to other taxes from January 1st 2020 (the application start dates for the procedure rules are prescribed individually.)
Under the Amending Protocol, the full text of Article 11 of the Convention (Interest) is amended. In principle, tax on interest income is imposed only in the country of which a person is a resident. However, for certain interest income, such as contingent interest etc., tax may be imposed in the source country at a prescribed tax rate under the Amending Protocol. In addition, Article 1 (General Scope), Article 4 (Residence), Article 10 (Dividends) and Article 13 (Gains) etc. have also been partially amended.
Moreover, Article 23 (Relief from Double Taxation), Article 24 (Non-Discrimination), Article 25 (Mutual Agreement Procedure), Article 26 (Exchange of Information) and Article 27 (Administrative Assistance) have been amended (Paragraphs prescribing arbitration procedures has been added to Article 25 and the full text of Article 27 has been amended.).
Besides these amendments, other relevant amendments have been made to the existing protocol (signed on November 6th 2003).
On applying relevant articles of the US-Japan tax treaty after the effective date of the Amending Protocol, the details of the Amending Protocol should be referred to.
3. Labor Management (Extension of Upper Limit of Settlement Period for Flextime System)
The upper limit of the settlement period for the Flextime System was extended from 1 month to 3 months. To set a settlement period longer than 1 month, employers must file a labor-management agreement with its duration to the labor authority.
In addition, the working hours for each 1-month period in a settlement period must not exceed 50 hours/week on average. At the same time, the working hours for the entire settlement period must not exceed 40 hours/week on average. For example, if an employee worked more than 50 hours/week on average in September and 40 hours/week on average in October, the employee must not work more than 30 hours/week on average in November.
The overtime hours are the sum of (1) hours worked exceeding 50 hours/week on average, and (2) hours worked exceeding the maximum statutory working hours for the settlement period (excluding the hours of (1)).
As the time management becomes complicated, it may be inevitable for employers to have an attendance management system if they intend to set a settlement period longer than 1 month.
（Source: “Easy Explanation & Guideline for Flextime System”, Ministry of Health, Labor and Welfare）
4. This Month’s Words of Wisdom
There are quite a few people who have more than 1,000 ‘’friends’’ on Facebook. However, I believe that you cannot make a true friend without the real friendship that comes from meeting in person. Therefore, old friendships from school never end.
This is not a proverb but a phrase I believe in.
For more details, please refer to Nagamine & Mishima JC Accounting K.K.