Special rule of the consumption-tax-exemption taxpayer status for a newly established company to be revised

Under the current consumption tax law, in light of the burdens a small-sized company may encounter, a newly established corporation (small-sized company) with initial paid-in capital of less than JPY10 million can apply for the Special rule of the consumption-tax-exemption taxpayer status whereby it can be exempted from consumption tax obligation for two years. However, such Special rule will not be available to a newly establish company if it is owned directly or indirectly by a company having taxable sales of JPY 500 million or more.

Eligibility to enjoy tax exemption:

1. Initial paid-in capital of less than JPY10 million upon establishment.
2. The sum of taxable sales and salary in a specific period is JPY 10 million or less.
3. Specific period means the first half of the prior fiscal year.

The above revision will be applied to a company established on or after 1 April 2014.