#034

An overview of the excellent tax collection organization of the Japanese government.

My name is Sadayasu Ito, a Japanese certified tax accountant. I am helping those who wish to start business in Japan. Please contact me by skype, e-mail and phone if you need my support.

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**Summary of Today’s Lecture**
Today’s topic is about tax audit. Before we talk about the detail of tax audit, let’s understand the organizational structure of tax authority in Japan.

First of all, there are two types of taxes in Japan: national taxes and local taxes.

National Taxes – Pay for Japanese government
Corporate income tax, Individual income tax, Inheritance tax, Consumption tax, Stamp duty, Withholding tax

Local Taxes – Pay for local government
Inhabitant tax, Enterprise tax, Fixed assets tax, Real estate acquisition tax

There are four levels of hierarchy.

1. Ministry of Finance -Legislation of tax law
2. National Tax Agency – Negotiation with tax agency of other countries
3. Regional Taxation Bureau – Audit for large corporation
4. Tax office – Audit for small & Medium size company, sole proprietorship

If your individual or small companies, tax audit will be conducted by the tax office. There are five departments in the tax office.

1. General Affairs Department
2. Corporate Tax Department
3. Individual Tax Department
4. Property Tax Department
5. Administrative Operation Department

Depending on the types of tax, department 2, 3, or 4 will come to tax audit.

Local taxes

There are two sub-categories in local taxes: prefectural tax and city tax.

Prefectural Tax Office
-45 prefectures in Japan
-Enterprise tax for corporate and individual, Large scale business tax, Inhabitant tax for corporate
-Sometimes, prefectural tax office comes for tax audit but their tax audit is not very strict

City government
Inhabitant tax for individual
Inhabitant tax for corporate
-Fixed assets tax, depreciable assets tax
-Usually, city government does not do tax audit

In Tokyo special 23 districts, prefecture tax office and city government is combined as ward office.