When you set up business in Japan, regardless of individuals or corporations, you should submit the application for Approval of Filing Blue Return.
If you received the approval of blue filing status, you can take some tax benefits.
〇 For sole proprietors
1. A blue return taxpayer can deduct up to JPY 650,000 from your taxable income (Attached financial statements by double–entry bookkeeping, and filing within due date are required).
2. A blue return taxpayer can deduct up to JPY 100,000 from your taxable income if you don’t meet the above requirements.
3. A blue return taxpayer can carry forward a net loss to the next 3 years.
4. A blue return taxpayer can report the salary that you paid to your family members as expense.
A blue return taxpayer must record all transactions by the proper accounting standards, prepare books and documents, and keep almost all of them for 7 years.
(Filing Due Date)
March 15th of the year that you want to be approved
(If you start your business in Japan after March 16th, you are required to apply within 2 months after the start date of your business)
〇 For corporations
1. Net loss carry-forward for 9 years (10 years from 2018.4 on)
2. Most of the special depreciation allowances and special tax credits can be applied to blue return corporations only.
A blue return corporation must record all transactions by double-entry bookkeeping, settle the accounts based on the records, keep almost all books and documents for 7 years.
(Filing Due Date)
The day before the first day of the fiscal year
If you are a new corporation, you are required to apply before the earlier date of the followings:
As mentioned above, there are many benefits for blue return filing status. If you forgot to submit the application, please consult your tax advisor or us immediately!