Japanese Law No.5 Debt-Equity Swap (DES)

When the debt-equity swap (DES) is used as the way of cutting the inheritance tax for the small and medium-sized company owner, there are two important tax issues we should consider as Shiho-Shoshi Lawyer.
One is the corporate taxation on the income from release of debt.
The other is the local corporate taxation on per capita basis.
The last time the latter one has mattered.

This taxation is on “the amount of the Capitals, Etc.” basis of the corporation concerned, and “the Capitals, Etc.” contains not only “capital” but also “capital reserve” and moreover contains ”capital surplus” too.

Therefore, in cases where your client (Stock Company) increases the amount of its stated capital and capital reserve by DES, we should determine whether the following legal move is required simultaneously, and provide advice to him or her on it.
If necessary, we should get professional help on tax and accounting grounds, but I think something of this proportion is basic things we just have to know.

(1) Reductions in Amount of Stated Capital and its Reserve
(2) Appropriation from Capital Surplus to Earned Surplus (This method shall be subject to Corporate Accounting Standards No.1)


にほんブログ村


にほんブログ村