Accounting Requirements - Japanese Tax Return Filing

Accounting Requirements for Japanese Tax Return Filing. When the accounting records for a Japanese office are maintained in the home country headquarters, the accounting records must comply with Japanese tax regulations. The following accounting information is a summary of the requirements in Japan.

Source Documents. Original source documents must be available in Japan for tax audits.

Required Documentation. The following items must be attached to the tax return when filing:

Detailed account schedule for each balance sheet account
Equity movements
Cash and bank balances
Directors' compensation
Rent paid during the year
Contributions
Miscellaneous income and expenses

Other Supporting Documentation. The following items are required for preparation of the tax return:

Withholding tax on interest
Other taxes and licenses paid
Large and Small assets
Dividends received
Offices by prefecture
Headcount
Corporate tax payment status

Consumption Tax Reports. Consumption tax-paying companies must provide detailed reports of both consumption tax received and consumption tax paid, which must agree with the balance sheet.

Entertainment Expenses. Entertainment expenses must be booked in the accounts separately from other expenses, such as travel expenses, as entertainment expenses are not deductible expenses under under Japan tax law.

Inventory Accounting. Inventory methods applied in the accounts must conform to Japanese permitted inventory accounting methods.

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