Japan Publishes Interpretive Guidance on Global Minimum Tax Laws and Regulations

October 18, 2023
2 minutes read

The Japanese National Tax Agency (NTA) has notified its interpretive position following the parliamentary and government enactment of the global minimum tax laws and regulations in the first half of this year. 

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Although the NTA's notice itself is not a legally binding norm, in-scope multinational enterprises may rely on it, since the NTA will not take a different interpretive position from it until further notice.

As the tax authority in Japan, the NTA has publicly notified its interpretive position on various Japanese tax laws. Likewise, the NTA updated the notice as of 21 September 2023 to add about 90 interpretive positions related to the newly enacted Japanese income inclusion rule (IIR), the main part of the OECD's global minimum tax proposal.

Most interpretive positions are taken from OECD publications, while some provide more specific views by referring to current Japanese tax law provisions. For example, Notice No.18-1-66 lists Japanese taxes imposed on corporations but excluded from the covered taxes; and Notice No.18-1-76 provides an illustrative formula for allocating corporate income tax borne by a domestic parent company under the Japanese controlled foreign company legislation to its foreign subsidiaries.

Along with the updated notice, the NTA issued a statement summarizing the updates and, more importantly, justifying these interpretive positions by claiming that the Model Rules and other relevant documents have been fully considered. The statement also points out that the Japanese global minimum tax laws and regulations should not be interpreted in a manner inconsistent with the Model Rules and related documents.