Application to Japanese Branch of Foreign Corporation of Local Tax and Tax Based on Business Size
A foreign corporation that maintains a permanent establishment in Japan and has a stated capital of more than 100 million yen as of the last day of the business year will be subject to the tax based on business size. In this case, the amount of stated capital refers to the total of the amount of stated capital of the corporation, and such amount is a yen equivalent derived from foreign currency translation by using the telegraphic transfer middle rate on the last day of that business year.
The amount of value addition will be calculated by totaling the following: the amount of remuneration and salaries, net interest it paid and net rent it paid which are included in the amount of deductible expenses or gross profits in connection with the calculation of domestic source income; and a single business year’s gain or loss.
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Moreover, the amount of stated capital, etc., that will be the base of taxation for the capital-based portion will be the amount of stated capital, etc., less the amount attributable to the foreign business, that is, the amount of stated capital, etc., divided in proportion to the number of employees.
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・Application to Japanese Branch of Foreign Corporation of Local Tax and Tax Based on Business Size