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💴 | What is corporate tax?Easy-to-understand explanation of basic knowledge that management should know


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What is corporate tax?Easy-to-understand explanation of basic knowledge that management should know

 
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Therefore, the final tax payment amount will be calculated at the statutory effective tax rate that reflects the deductible amount of business tax.
 

What you need to know when running a company is the basic knowledge about "corporate tax".The tax rate is different for each corporate category ... → Continue reading

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Statutory effective tax rate

Statutory effective tax rate(Hoteijikkozeiritsu, English: normal effective statutory tax rate) is for taxable incomeCorporate tax,Resident tax,Business taxRefers to the comprehensive tax rate based on the prescribed formula.Tax effect accountingInDeferred tax asset,Deferred tax liabilityIs a temporary differenceStatutory effective tax rateIt is calculated by multiplying by.

Overview

Originally, the statutory effective tax rate should match the total tax rate, which is simply the sum of the corporate tax rate, business tax rate, and inhabitant tax rate.However, first of all, among the constituents of the total tax rate, the inhabitant taxStandard taxable valueIs based on corporate tax, not taxable income (the other two are based on taxable income).Second, among the constituents of the statutory effective tax rate, business tax is allowed to be deductible in calculating taxable income for the fiscal year in which it is paid.Since it is necessary to take these two points into consideration, the actual tax burden rate will be smaller than the simple sum.

Based on these, if you display it with a mathematical formula, the following formula is derived.

Total tax rate = Corporate tax rate + Corporate tax rate x Resident tax rate + Business tax rate (Resident tax rate is limited to the effect of multiplying the corporate tax rate)
Legal effective tax rate = Total tax rate-Business tax rate x Legal effective tax rate (Business tax rate is limited to the effect of discounting the legal effective tax rate)
Legal effective tax rate = [corporate tax rate x (1 + inhabitant tax rate) + business tax rate] ÷ (1 + business tax rate)

For example, if the surface tax rate is corporate tax rate: 30%, inhabitant tax rate: 17.3%, business tax rate: 9.6%, the statutory effective tax rate will be as follows.

Legal effective tax rate = [0.3 x (1 + 0.173) + 0.096] ÷ (1 + 0.096) ≒ 40.86%

Factors inconsistent between the statutory effective tax rate and the corporate tax burden rate after tax effect accounting is applied

In most cases, the theoretical effective tax rate and the corporate tax burden rate after applying the tax effect accounting actually borne by the company do not match.There are various factors, but the main ones are as follows.

  1. While the statutory effective tax rate is based on taxable income, the corporate tax burden rate after applying tax effect accounting is based on corporate accounting.Originally between the twoEntertainment expensesEtc. do not match, which causes a difference.
  2. Of these, when it is judged that there is an unschedulable temporary difference that is unlikely to be collected in the future and cannot be matched with taxable income.Deferred tax assetIs not allowed to be recorded and is deducted as, which causes a difference between the two as well as a permanent difference.

Legal effective tax rates in other countries

Compared to outside Japan, Japan's statutory effective tax rate is heavier, and value-added taxconsumption taxIt has been pointed out that is light.Ministry of FinanceAccording to statistical data, the statutory effective tax rate in Japan is 2011% until 40.69, 2012% from 2013 to 38.01, and 2014% after 35.64 after the end of the special corporate tax for reconstruction.[1][2].KeidanrenIs requesting a reduction in the effective tax rate in 2012 and a shift from corporate tax to consumption tax (value added tax) as in Europe.[3].

Legal effective tax rate of each country[4]And VAT (as of April 2014)[5]
Country name (state name)Statutory effective tax rateValue-added tax (standard tax rate)
United States (New York)45.67%8.375%
United States (California)40.75%10.75%
Japan35.64%
8%
France33.33%19.6%
Germany29.55%19%
Chugoku25.00%17%
South Korea24.20%10%
The United Kingdom24.20%20%
Singapore17.00%7%

Between EU member statesEU lawIn principle, the standard tax rate for indirect taxes is required to be 15% or more (however, a wide range of reduced tax rates are implemented except in Denmark).It also requires invoices.Therefore, when discussing tax burdens, not only corporate tax on pre-tax profits, but also corporations, etc.Added valueIt is necessary to comprehensively consider the value-added tax (consumption tax), which is the tax on the tax.In addition, in countries where the promotion of high welfare is a national policy (Northern Europe, etc.), the tax burden tends to be correspondingly high, so when making an international comparison of tax burden, both the welfare and economic policies of each country should be considered. There is a need to.In addition, the value-added tax of EU countries is multiple tax rates except Denmark, the reduced tax rate (0% in some countries) is applied to daily necessities, and the weighted tax rate is applied to luxury goods, and there are roughly 5 levels. ..In Japan, the Komeito is the center of the call for multiple consumption tax rates, that is, reduced tax rates, in order to substantially reduce the tax burden.[6].

footnote

  1. ^ International comparison of effective corporate income tax rates: Ministry of Finance
  2. ^ Outline of tax reform in 23/24 --- Corporate Action Division, Ministry of Economy, Trade and Industry
  3. ^ Calling for the execution of growth strategies and fiscal consolidation-Aiming to escape from the current crisis--- Nippon Keidanren Federation
  4. ^ International comparison of effective tax rates for corporate income taxationMinistry of Finance
  5. ^ International comparison of value-added tax rate (standard tax rate)Ministry of Finance
  6. ^ Reduced tax rate | Komeito understood by policy theme | Komeito

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