011 Impact made by the inapplicable reduced tax rate in the revision of Corporation Tax Act 2010
We reported in our website on Revision of Group Corporation Tax Act 2010 on March 19. Today we would like to talk about how much impact it would make when Special Application of reduced tax rate for Small and Medium Enterprises (SME) becomes inapplicable due to that revision.
According to the tax system applied before the fiscal year 2010, t was possible that SME whose capital stock is under 100 million yen can apply to the reduced tax rate of 18% if the taxable income is under 8 million yen.
However, this can not be the case if an SME is a subsidiary company wholly owned by a parent company whose capital stock is more than 500 million yen.
Therefore, companies fit in this case have to pay attention to it when they calculated the effective tax rate with 18% because it will generate the impact on the deferred tax. This revision becomes effective after the year starting April 1, 2010.
