Spring Newsletter (No.31) as of



Impact of negative interest

On January 29, 2016, the Bank of Japan (BOJ) announced “Quantitative and Qualitative Monetary Easing with Negative Interest Rates.” This came into effect on February 16, 2016 and banks are now being charged 0.1% interest for parking additional reserves with the BOJ. Consequently, the yen LIBOR fell into negative territory and also government bonds are sold with negative yields.

The Accounting Standards Board of Japan (ASBJ) released the following two ASBJ meeting minutes on negative interests, “Discount rates applied to retirement benefit accounting (released on March 10, 2016)” and “Treatment of exceptional method of interest rate swaps (released on March 24, 2016)” to make the discussions publicly known.

Based on “Discount rates applied to retirement benefit accounting,” the ASBJ made a provisional judgment that both negative interest rates and zero rates will be permitted for the calculation of retirement benefit obligations for the year ended March 31, 2016.


Corporate Taxes

Income tax rate reduction

The national corporate income tax rate (currently 23.9%) will be reduced as follows:

Fiscal years beginning on or after April 1, 2016: 23.4%
Fiscal years beginning on or after April 1, 2018: 23.2%

NOL deduction ceilings

The ceiling for NOL deductions and carry-forward period will be revised as follows:

FY 2016 FY 2017 FY 2018 FY 2019
 Deduction limit 65% 60% 55% 50%
 Carry-forward period 9 years 9 years 9 years 10 years

SMEs are still eligible for a 100% NOL deduction.

Factor-based enterprise tax apportionment

Factor-based enterprise tax is imposed on ordinary companies with share capital in excess of 100 million yen.

The value added and capital levies based tax apportionment will increase from the current 37.5% to 62.5% from fiscal years beginning on or after April 1, 2016, while the portion based on income will decrease.

Depreciation method for leasehold improvements

Leasehold improvements and structures acquired on or after April 1, 2016 can only be depreciated using the straight-line method. The declining balance method is no longer permitted.

Consumption Taxes

On May 28, 2016, Prime Minister Abe announced that he wanted to delay the increase in the consumption tax rate to 10% from next April to October 2019. However, there are some cabinet members that are expressing concerns on this, and as of this printing, the outcome is still unclear.


Update on Social Insurance Rates

Effective March 2016, some of the social insurance rates have changed as follows:

Employer Employee
Before Current Before Current
 The Health Insurance Association
 Health Insurance 4.985% 4.980% 4.985% 4.980%
 Care Insurance
 The Health Insurance Association
 Health Insurance 4.990% 4.985% 4.990% 4.985%
 Care Insurance
 The Foreign Transportation & Finance
Health Insurance Association
 Health Insurance
 Care Insurance 0.450% 0.490% 0.450% 0.490%

Effective April 2016, employment insurance rates decreased as follows:

Employer contribution – from 0.85% to 0.7%
Employee contribution – from 0.5% to 0.4%

Effective April 2016, the child–rearing contribution rate increased from 0.15% to 0.20%

Tax-Exempt Commutation Allowances

The maximum amount of tax-exempt commutation allowance permissable to be paid by employers has increased from 100,000 yen per month to 150,000 yen per month. This became retroactively effective for payments made on or after January 1, 2016.

Employment Registration for Foreign Nationals

The followings documents are now necessary at employment enrollment and for year-end adjustments of foreign nationals:

Employee information
(1) Residence status
(2) Period of stay
(3) Employer name
(4) Address in Japan
(5) Registered name at his/her local city
Dependents living in Japan
(1) Dependents’ addresses in Japan
(2) Registered names at their local cities
(3) Document to show a relationship between the foreign nationals and his/her dependents
Dependents living outside of Japan
(1) Documents proving a family relationship(registration document, birth certificate, marriagecertificate; these documents are to be translated in Japanese.)
(2) Documents which show the funding of living expenses to the dependents (copy of bank statements which show funding to the dependents outside of Japan, statements of foreign remittances to dependents if the fund transfers occur more than twice a year)

For details or documents supporting the funding of living expenses to dependents (National Tax Agency HP), please access:


“My Number” information for foreign nationals and dependents living in Japan are also required at the employment registration.

Social Insurance Enrollment Conditions for Part-Time Employees

As explained briefly in our past newsletter (No.27), social insurance enrollment for part-time employees will apply to a broader range of people. For spouses working at large companies with more than 500 employees, they may no longer be claimed as dependents from October 2016. Details of this criteria will be explained in more detail in our upcoming fall newsletter.

Lump-sum Pension Payments to Foreign Nationals

Foreign nationals leaving Japan who joined the Japanese pension scheme for six months or longer can apply for lump-sum withdrawal payments. An application needs to be filed within two years after he/she leaves Japan.

The amount will be calculated based on a formula in the year when the last pension insurance contribution payment was made and his/her coverage period.

The applicant or his/her agent can file the application with supporting documents to the Japan Pension Service by mail.

(Required documents)

(1) Application for lump-sum withdrawal payments
(2) Copy of passport (pages showing date of final departure from Japan, name, birth date, nationality, signature and resident status)
(3) Documents to prove the individual no longer has a residence in Japan
(4) Bank account documents issued by bank (bank name, branch name, account number and anything to show the account holder is the applicant or bank’s verification stamp on the applicant)
(5) Pension handbook

Lump-sum withdrawal payments of insurance for non-Japanese (Japan Pension Service HP)


Please approach our payroll in-charge if you have any foreign nationals leaving Japan.

Awarded 2016 Corporate Intl Magazine Global Award – Full Service Accountancy Firm of the Year in Japan

We have been named the sole Editors Choice winner of the 2016 Corporate Intl Magazine Global Award – Full Service Accountancy Firm of the Year in Japan.

Company Name Change and Office Relocation

As announced earlier, we changed our firm name and relocated our offices. Our new name and office address are as follows:

New name OC & Associates K.K.
New address Kioicho Building 17F, 3-12 Kioicho, Chiyoda-ku, Tokyo 102-0094
Phone 81-3 (5276) 0900 (No change)
Email address No change until further notice

Our Singapore subsidiary has also changed its name to OC & Associates Pte. Ltd.

OC & Associates Tax Co.

We have decided to incorporate our tax business currently provided by three CPTAs to offer more integrated services and to respond to business environment changes. Our tax services will make a fresh start as OC & Associates Tax Co. from June 21, 2016.

Hiroko Hanato, CPTA and Michiya Akuzawa, CPTA will become the founding partners.


This newsletter is for private circulation only. Although care has been taken in the preparation of this document, contents have been highly summarized and it may contain errors and/or ambiguities for which we cannot be held responsible. If you are concerned about a specific issue, we recommend you seek professional advice. The material contained in this newsletter may not be reproduced in whole or in part by any means, without the permission of OC & Associates, Hiroko Hanato CPTA Office, Michiya Akuzawa CPTA Office or Fumihisa Shimono CPTA Office.