Challenges Ahead for Sole Proprietors! The Complex World of ‘Fixed Tax Reduction’ Starting in June – Confusion Looms Over Short-Lived System

“Just finished filing my first tax return after the start of the ‘invoice system’…”

The first tax return after the start of the invoice system has just been filed, but next month, in June, a “flat-rate tax reduction” will begin.

This new system, which was created in response to soaring domestic prices, offers a total tax reduction of 40,000 yen (30,000 yen for income tax and 10,000 yen for inhabitant tax) from one’s salary, but the application rules and application process are complicated, and confusion is inevitable, according to the company.

However, the application rules and application procedures are complicated, and confusion is inevitable, according to Mr. Shinya Yamada, an otaku accountant well known for his YouTube channel, “Otaku Accountant Ch [Shinya Yamada] Slightly Benefit with Money.

Salaried workers are also eligible… The application rules and application process are complicated, and only you can spot mistakes!

The flat-rate tax reduction is a truly riddle system, with complicated and troublesome calculations, and it only takes one year to complete (smiles). For company employees, it starts in June of this year, but for pensioners, it starts in two phases, June (income tax reduction) and October (inhabitant tax reduction), and for most sole proprietors, it is done on their tax return next year.

In addition, generally, a small amount of the tax reduction will be deducted from the monthly salary, but if the total amount of the tax reduction is less than 40,000 yen, it is planned to be paid out in the form of a benefit. However, the details of that benefit have not yet been announced. Furthermore, since this is an irregular system that will only be in place for one year, confusion and mistakes on the part of the local government can be expected, but only the applicant will be able to notice them. I think it’s better to start studying now.”

In addition to his Otaku Accountant YouTube channel, Mr. Shinya Yamada is the chairman of Entertainment Culture Tax Corporation, an accounting firm specializing in the entertainment industry, as well as an author and a member of the government’s administrative reform committee.

He says this year’s tax return, the first since the start of the invoice system, is better.

The invoice system has been difficult in its own way, but it is a system that will continue to be used in the future,” he said. There were some changes in interpretation right after it started, which made it a little rough, but there is hope that it will be improved little by little and that the process itself will become easier when it is computerized someday.

Besides, thanks to the benefit system that was created with Corona, this industry has been busy with something every year, and this year it seems like the benefit system just changed to an invoice system. So for us, this year’s flat-rate tax cut is more daunting (laughs).”

With less than a month to go before the start of the new system, even accounting professionals are still scratching their heads over the new flat-rate tax reductions.

The first tax return after the start of the invoice system was…

This year, our office handled about 250 tax returns. Since most of our clients are sole proprietors with sales of 10 million yen or more, more than 90% of them were registered for the invoice system.”