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  • April 2017
  • METI Formulates “Key Points to Be Noted in Filing a Request for the Special Provisions for an Extension of the Due Date for Filing a Final Return Form of Corporate Tax Payment”

METI Formulates “Key Points to Be Noted in Filing a Request for the Special Provisions for an Extension of the Due Date for Filing a Final Return Form of Corporate Tax Payment”

The Ministry of Economy, Trade and Industry (METI) has been engaging in the enhancement of corporate governance to encourage Japanese companies to make quick and bold decisions aiming to improve their profitability, earning power, and mid- to long- term corporate value. As one of these efforts, aiming to promote constructive dialogues between companies and shareholders/investors, Japan has introduced special provisions under which a company is allowed to extend the due date for filing a final return form of corporate tax payment if the company intends to hold an annual shareholder meeting on a date beyond three months from the closing date of financial accounts. Concerning these special provisions, METI has compiled key points that companies should note in filing a request for the application of the special provisions.

1. Background

To promote mid- to long-term investment for the improvement of sustainable corporate value, it is indispensable for Japanese companies to enhance constructive dialogues with investors. It is also important to develop a most-optimal environment for such dialogues from a global point of view. However, looking at the current state, Japanese companies do not provide a sufficient period of time for making dialogues with shareholders/investors or preparation time for enhancing information disclosure, compared to those in Western countries, due to the short period from the closing date of financial accounts to the date of an annual shareholders meeting and the high degree of concentration of annual shareholder meeting dates.

In this situation, as one of approaches to securing sufficient time before annual shareholder meetings, it is effective that the record date of an exercise of a voting right should be prescribed differently from the closing date of financial accounts and that annual shareholder meetings should be held within three months from the record date. For example, a company whose closing date of financial accounts is the end of March would hold an annual shareholder meeting before the end of July.

Against this backdrop, under the FY2019 Tax Reform, as part of the tax reform enhancing corporate governance and encouraging companies to engage in proactive business management, Japan has stipulated measures under which companies are able to file a request for a final return form of corporate tax payment after finishing their annual shareholder meeting if they intend to hold the annual shareholder meeting on a date beyond three months from the closing date of financial accounts. For example, a company whose closing date of financial accounts is the end of March would hold an annual shareholder meeting in July or later. This allows listed companies to flexibly set the dates of annual shareholder meetings, which will contribute to promoting enhanced dialogues between companies and shareholders/investors.

2. Major details of the document

Based on  confirmation with national tax agency, the document describes streamlined interpretations and other key points concerning the provisions of Article 75-2 (1)(i) of the Revised Corporation Tax Act, as a reference for companies in filing a request for extending the due date for filing a final return form of corporate tax payment under the special provisions if the companies intend to prescribe a record date of an exercise of a voting right different from the closing date of financial accounts and to change the date of their annual shareholder meeting.

Specifically, the document describes [i] eligible companies subject to the special provisions, [ii] case examples of articles of incorporationand a set of documents submitted to the district director of the tax office, [iii] case examples of the number of months as a period designated by the district director of the tax office (period during which corporate tax payment is extended), [iv] closing date of filing an application for the special provisions, and [v] period during which the special provisions apply.

In addition, concerning the interpretations and other key points of Article 72-25 (3)(i) of the Revised Local Tax Act (including cases where applied mutatis mutandis under Articles 72-28 (2) and 72-29 (2) of the Act), a special provisions for the extension of due date for filing a final return form of enterprise tax , the document describes the same procedures as those shown in Items [i] to [v] above, based on confirmation with the Ministry of Internal Affairs and Communications.

Appendix:

Release date

April 18, 2017

Division in Charge

Corporate Accounting, Disclosure and CSR Policy Office, Economic and Industrial Policy Bureau

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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