Tax burden can arise from any activities in business and personal life. In Japan, as in other countries, taxpayers are therefore often subject to tax audit. If a taxpayer receives tax assessment at the end of the tax audit, the taxpayer sometimes requests the government or court to review and set aside the assessment.
The taxpayer should respond to the tax audit with being advised by a lawyer expertized in tax law in order to minimize the risk of being imposed undue back taxes and penalties. During the tax audit, the taxpayer receives various questions and requests from auditors, who are seeking facts and evidence that support their position. To defend its right against them and get over the audit in a fair manner, legal advice, as well as advice from an accountant, is essential for the taxpayer.
As it is in the tax audit, an expert in tax law is essential in the case where the taxpayer files, with the Japanese government or court, a complaint to set aside the tax assessment imposing undue taxes and penalties. As the government and court review the case from legal perspective, it is a key for the taxpayer in order to achieve satisfactory results to file a claim with cogent argument supported by law and judicial precedents in an effective and timely manner. It is impractical for the taxpayer to organize such a claim without an experienced lawyer.
The advantage of having legal advice increases if the transaction at issue involves any international aspect. The tax auditors, reviewers and judges are often unfamiliar with law and practice of international transaction. Thus, the taxpayer cannot succeed in getting over the tax audit or being awarded judgment upholding its position, without organizing its claim in light of the law and practice of international transaction that underlie the taxation at issue. Organizing such a claim requires advice of a lawyer experienced in both international transaction and tax law.
Our firm has lawyers whose experience ranges from advising taxpayers in tax audit to representing them at the administrative and judicial review. The issues involved in the cases vary from the validity of international arrangement for tax saving to interpretation of domestic agreement under tax law, as some of them are listed below. As well as in fully representing taxpayers, our lawyers have experience in assisting taxpayers, sometimes collaborating with certified tax accountant (zeirishi), by opining on specific issues that arose in tax audit or administrative or judicial procedure.
Examples of Issues We Worked on:
Tax consequences of partnerships and trusts established under foreign law
Characterization of income under tax treaty
Eligibility of foreign subsidiaries for exemption from controlled-foreign-company taxation (CFC taxation) or anti-tax haven taxation under Japanese tax law
Recognition of losses arising from corporate restructuring
Tax consequences of transactions involving complicated aspects, such as a cross-border transaction governed by a foreign agreement and law and an arrangement under which the payment amount is determined in accordance with EBITDA
Consequences on consumption tax of cross-border transactions
Consequences on inheritance and gift tax of transfers of assets within family
Classification of document for stamp-tax purposes