Can You Negotiate During a Tax Audit in Japan?

Hi, my name is Taisei Koshida, and I am a certified public accountant and tax accountant in Japan.

I assist foreign business owners with accounting and tax matters in Japan, including tax filings and tax audits.

Can you negotiate with tax officers during a tax audit in Japan? In practice, there may be room for negotiation, particularly when tax officers propose several amendments. This article explains when such negotiations may be possible and what types of amendments you should be cautious about accepting.

Negotiating Amendments Proposed by Tax Officers

During a tax audit in Japan, tax officers often propose several amendments when they find mistakes. In such cases, there may be room for negotiation over which points you will accept.

When Negotiation May Be Easier

If the end of June is approaching, opportunities for negotiation increase. This is because the fiscal year of the Japanese tax office begins in July, and tax officers generally aim to conclude ongoing tax audits by the end of the fiscal year.

Be Careful About Accepting Findings of Concealment or Disguise

However, you should be particularly cautious about accepting a tax officer’s finding of concealment or disguise.

Such a finding can have more serious tax consequences than an ordinary mistake. For more information about why this distinction matters, please see the following article:

What is The Worst-case Scenario in Japan’s Tax Audits?

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