Conducting international transactions beyond the border may raise issues in relation to international tax. We support companies to conduct their business globally through filing tax forms and dealing with international taxes.
Important concepts and systems outlined in international tax are as follows:
(1) International Double Taxation
There are concerns in international tax about where companies should pay income taxes and whether these taxes will be treated as double taxation. “Tax treaties” and “Foreign Tax Credit” help companies avoid situations of double taxation. Japan currently has tax treaties in place with around 100 countries and regions.
(2) Transfer Pricing Taxes
Transfer pricing taxes prevent the transfer of corporate income overseas through international transactions. Multinational companies operating globally are free to set their prices for intercompany transactions between different group companies. However, these prices should be maintained at reasonable levels in accordance with transfer pricing taxes.
(3) Thin capitalization taxation
The thin capitalization taxation rule applies to companies financed by foreign controlling shareholders through a relatively high level of debt compared to equity. This rule avoids the deduction of taxes from interest paid to finance large amounts of debt as opposed to equity.
Nakamoto International Tax Corporation offers proposals on how to deal with international tax issues through analysis of the risks and ways to reduce their impact. It also assists foreign companies and their management with accounting, reporting, and English-language explanations of Japanese tax law.