Backdating capital gains
by filing a revised assessment, assessment or determination) and two further months have passed as a grace period for paying the required tax.
Entaizei at the lower rate would likely apply from when the tax concerned was first due.
Where a 7.3% rate would normally apply the STML allows the use of the higher of 7.3% or the Bank of Japan lending rate on the last day of November of the previous year plus 4%.
Given Japanese rates have been less than 1% for recent years the rate of entaizei has varied between 4.5% and 4.7% between 20.
The onus of proof to show that there was no such expectation is on the taxpayer.
Back to types of interest and penalty This penalty applies when either (a) a return is filed or a determination of tax payable (kettei/決定) is made after the appropriate time limit; or (b) when an amended tax return or assessment (kousei/更正) is made on such a return.
One of the purposes of entaizei is to help ensure fairness between taxpayers who do not comply on a timely basis with their tax obligations and those that do so comply.
Given this underlying intent it is not possible for the tax authority to apply any discretion in mitigating a charge to entaizei but only to mitigate the charge according to the limits prescribed under the tax law.
there is a wide range of different tax penalties in Japan with rather confusing and overlapping names similar economic functions.However in this case Insufficient Return Penalty can still apply.Also, under very limited circumstances, where there was an intention to file a return but the return was filed late, the No Return Penalty can be mitigated .The rate of penalty is 15% of the tax that should be paid.However when such tax exceeds JPY500,000 then a further 5% penalty applies.
A rare case where mitigation was granted for “appropriate reasons” was where a taxpayer, who was a travelling official of the local court Japanese court system, deducted his costs of travel and lodging from his total income under the guidance of his local tax office.