adjusted income/ 調整所得
Adjusted income is defined as sum of taxable income, interest expense, depreciation expense and dividend income, but excluding extraordinary income or loss.
A note that is made to explain the main text. For example, in case of accounting, calculation methods of inventories are required to be noted in annotation section of financial statements.
arm's length price/ 独立企業間価格
Price which should be used among two related corporations in different countries when goods and services are traded. This should be the same as the price normally used when 2 unrelated corporations trade goods and services.
average index monthly earnings/
Simplified segmented amount of salary or compensation used to calculate health insurance premium and employee pension premium. Amount in average index monthly earnings is multiplied by health insurance rate, or employee pension rate to find amount of the premiums.
bad debt provision/ 貸倒引当金
Amount that is accumulated on accounting books which represents amount of claims that are expected to be uncollected.
blue return/ 青色申告
A method of tax return for businesses which require precise recording of daily transactions and calculation of taxes based on the recording. Business filing blue tax return may obtain tax privileges, such as special income deduction, and carry back and forward of losses.
capital improvement/ 設備改良
Renovation of an asset that increases value of the asset, or extends useful life of the asset.
carry-back of losses/ 欠損金の繰越
A tax refund system, which brings back current losses to the previous year and obtains refund of tax paid in the previous year. Carry back of losses is only allowed for small and medium-sized corporation.
CIF price (cost, insurance and freight price)/ CIF価格 (保険料運賃込価格)
Price of importing goods, which insurance and freight costs are also added on price of goods imported.
comparable uncontrolled price method/ 独立価格比準法 (CUP法)
A method of pricing goods traded among two related corporations in different countries, which references to the price used in trading of similar goods among unrelated corporations in an open market.
comparative salary payment/
Comparative salary payment = total salary payment for previous year + (total salary payment of previous year × rate of standard employee × 30%)
Capital investment to a corporation made by assets other than money.
cost plus method/ 原価基準法 (CP法)
A method of pricing goods traded among two related corporations in different countries, which references to the cost of manufacturing plus an appropriate profit margin.
declining balance method/ 定率法
A method of depreciating fixed assets, which the amount of depreciation charged to an asset declines over time and is less charged during the end of its useful period.
defined benefit plan/ 確定給付年金
An optional pension plan added on top of employee pension, or national pension plan, which amount of contribution is determined by amount of specified benefit received in the future.
defined contribution plan (401K)/
An optional pension plan added on top of employee pension, or national pension plan, which amount of contribution to the plan is specified, but amount of benefit is not specified and depends on investment return.
dependent deduction/ 扶養控除
The amount that Japanese National Tax Agency allow taxpayers to deduct from income when calculating income and local tax, because the taxpayer is supporting a dependent. Amount of the deduction differs by age of dependent.
A method of allocating costs required to purchase fixed assets over a specified period of time, called useful life.
employee pension/ 厚生年金
A public pension plan which employees of private enterprises in Japan join. Individual businesses with more than 4 employees and all corporations must join the pension plan. Contribution to the pension plan is borne fifty-fifty by employee and employer.
employment income deduction/
Amount that Japanese National Tax Agency allow employment income earners to deduct from income when calculating income and local taxes. The amount of deduction differs by the amount of employment income.
family corporation/ 同族会社
Under taxation law, it is a corporation which its 50% of shares are held by less than 3 relatives or companies run by relatives.
income deduction/ 所得控除
Amounts that Japanese National Tax Agency allow taxpayers to deduct from income when calculating income tax to accommodate personal situations. Some kinds of income deductions are the following:
- casualty loss deduction,
- medical expense deduction
- social insurance deduction,
- small-scale enterprise mutual aid premiums deduction,
- life insurance deduction,
- earthquake insurance deduction,
- donation deduction,
- disabled person deduction,
- widow and widower deduction,
- working student deduction,
- spousal deduction,
- dependent deduction, and
- general deduction.
individual inhabitant tax/ 個人住民税
A tax levied by local government and municipality to individuals residing in its jurisdiction as of January 1, every year. Inhabitant tax is levied on income of previous year.
in-kind wage/ 現物給与
A kind of compensation paid from employer to employee in form of goods and services other than cash. An example of in-kind wage is a house, which is rented by employer, and provided to employee.
itemized method/ 個別対応方式
A calculation method of taxable purchase credit, which divides consumption tax spent for purchases into 3 different categories:
- consumption tax on purchases related to taxable sales,
- consumption tax on purchases related to non-taxable sales,
- consumption tax on purchases related to both taxable and non-taxable sales.
large-sized corporation/ 大規模法人
Under taxation law, it is a corporation with paid-in capital more than or equal to 500 million yen.
life insurance deduction/ 生命保険料控除
The amount that Japanese National Tax Agency allow taxpayers to deduct from income when calculating income and local tax, because the taxpayer is paying life insurance, or personal pension insurance, or long-term and medical care insurance.
lower of cost or market method/ 低価法
A method of inventory valuation, which compares purchasing price of inventory to the market value and use the lower one as an estimate value.
minimum wage/ 最低賃金
The smallest amount of hourly wage employer must pay to employees.
nonprofit organizations (NPO)/
Citizen’s organizations which aim social contributions and charitable activities without receiving compensation.
non-taxable limit of commuting allowance/ 交通費の非課税限度額
Maximum amount of commuting allowance that is not subject to income taxation. Amount of commuting allowance exceeded this non-taxable limit is added to employment income and is subject to income tax.
nursing care system/ 介護休暇制度
A labor system which provides a maximum of 5 days leave to an employee who is nursing a member of his/her family. If an employee has more than 2 family members who require nursing care, the employee may take nursing care leave up to 10 days.
obsolete asset/ 陳腐化資産
An asset, which became old and its value has decreased, because of technological innovation, or release of new product.
100% group/ 100%グループ
A relationship between corporations which has either the following relationship:
- A relationship which a person or a corporation holds 100% of outstanding shares in a company, or
- A relationship of wholly owned companies which 100% of outstanding shares in a company and 100% of outstanding shares of the other company are held by the same person or corporation.
per capita tax/ 均等割
A portion of individual inhabitant tax levied uniformly to people regardless of the amount of income. Per capita tax is collected by a local government and municipality to people who are residing in their jurisdiction as of January 1 every year.
petty sum depreciable assets/
Assets which its useful life is less than one year or purchasing price is less than 100,000 yen. Petty sum depreciable assets can be depreciated and expensed immediately to the current year.
proportional method/ 一括比例分配方式
A calculation method of taxable purchase credit used when relationship of consumption tax spent for purchases and taxable and non-taxable sales are not specifically defined.
public interest incorporated associations/ 公益社団法人
Association of people aiming a public interest purpose and is incorporated.
qualified pension plan/ 適格退職年金
An optional pension plan added on top of employee pension plan, which company accumulates funds to life insurance companies, or trust banks, or financial institutions outside the company.
rate of standard employee/
Rate of standard employee = (standard employee) / (employee at the end of previous year)
resale price method/
A method of pricing goods traded among two related corporations in different countries, which is determined by deducting gross profit markup from the price used to in trading of similar goods among unrelated corporations in an open market.
Individuals who have domicile in Japan or have resided in Japan for a continuous period of 1 year or more.
reversal method/ 洗替え低価法
A method of inventory valuation used when value of inventory has decreased and book value of the inventory is written-down in the end of year. The reversal method reverses the written-down amount in the beginning of next year.
- Secret Expense
- Separation Method
- Short Working Hour System
- Small and Medium-Size Corporation
- Specific Purpose Company
- Specified Dependent
- Specified Expense Deduction
- Standard Employee
- Statement of Cash Flow
- Stock Option
- Tax Credit
- Taxable Purchase
- Taxable Purchase Credit
- Taxable Sales Ratio
- Transfer Pricing
secret expense/ 使途秘匿金
A kind of expense which its purpose and receiver’s name and address are not specified in books and records. Secret expense is not deductible from income and levied additional corporate tax of 40%.
separation method/ 切放し低価法
A method of inventory valuation used when value of inventory has decreased and book value of the inventory is written-down in the end of year. The separation method does not reverse the written-down amount in the beginning of next year.
short working hour system/
A labor system which limits working hours of qualified employee to the maximum of 6 hours a day if the employee demands.
small and medium-sized corporation/ 中小企業
Under taxation law, it is a corporation with its paid-in capital of 100 million yen or less except for a corporation which 100% of its shares are directly or indirectly held by one large-sized corporation, and corporation which 100% of its shares are held by two or more large-sized corporations in a 100% group.
specific purpose company/ 特定目的会社
A corporation which is established aiming to gather funds by placing mortgage on assets the corporation owns and issuing securities.
specified dependent/ 特定扶養者
Dependents who are between 19 and 22 years old at the end of year. Specified dependents are eligible for a dependent deduction of 630,000 yen (general dependent deduction of 380,000 yen plus extra dependent deduction of 250,000 yen) per dependent.
specified expense deduction/
Amount National Tax Agency allow employment income earner to deduct expenses spent for specified purposes from income when calculating income tax. Specified purposes here are defined as the following:
- commuting expense,
- moving expense for job related moving,
- training expense for acquiring skills and knowledge related to job,
- expense spent to obtain qualifications necessary for job, and
- expense spent for returning to home due to transferring without family.
- expense necessary to spent to perform one’s job.
standard employee/ 基準雇用者
Standard employee = number of employees at the end of previous year – number of employees at the end of current year
statement of cash flow/
A financial statement, which shows changes in cash and cash equivalences over a period of time and analyzes cash changes in operating, investing, and financial activities.
stock option/ 自社株購入権
A privilege which a corporation gives to its employees and directors rights to buy or sell the corporation’s stock at agreed price in certain period of time. Stock option is normally issued as a form of non-cash compensation.
tax credit/ 税額控除
The amount which Japanese National Tax Agency allows taxpayers to deduct from amount of tax calculated. Many of tax credits are created to promote certain activities, such as donations, earthquake resistant renovation of house and wireless filing of tax return.
taxable purchase/ 課税仕入
Purchases which are subject to consumption tax.
taxable purchase credit/ 仕入税額控除
The amount that Japanese National Tax Agency allows consumption taxpayer to deduct from the consumption tax obligation, because the taxpayer paid consumption tax to suppliers
taxable sales ratio/ 課税売上率
Taxable sales ratio = compensation for sales of taxable properties in Japan during the year / compensation for sales of all properties in Japan during the year, or Taxable sales ratio = (taxable sales + exempt sales) / (taxable sales + exempt sales + non-taxable sales)
transfer pricing/ 移転価格
Price used among two related corporations in different countries when goods and services are traded, such as a parent corporation exporting to its subsidiary in a foreign country.
white return/ 白色申告
A method of tax return for businesses other than blue return, which has less requirements and has less tax privileges compared to blue tax return.
withholding tax/ 源泉徴
A system of paying income tax, which the payer of salaries, fees and charges, etc. deducts the income tax from the payment and pays tax to the tax office instead of the earners. The amount of tax withheld is adjusted at year-end (called year-end tax adjustment) or when the tax return is filed.
worker's accident compensation insurance/ 労災保険
A form of insurance which provides benefits when a worker is injured or becomes sick at work or while commuting. Any business employing a worker is required to join the insurance and the premium is borne exclusively by employer. The premium is calculated by the total wage times the insurance rates and the rates differ by industries.