Speed-Dial AI Lawyer (470) 835 3425 FREE

FREE Legal Document translation

Try Free Now: Legalese tool without registration

Find a LOCAL LAWYER

Revised Content on Filing the Report of Foreign Assets (RFA)

Important Clarification

Edit: Please note that the title of this document contained an error. Whether or not you need to file depends on your specific tax status. For more details, consult the section titled ‘Who Needs to File’ below.

Given the current economic climate, particularly with the yen being exceptionally weak, there may be an increased number of individuals who fall under the mandatory obligation to file the Report of Foreign Assets (RFA). As there was no existing wiki page dedicated to this significant topic, we felt it necessary to create a draft for community input. This page will be updated with your contributions and corrections, so any specific examples of filings are greatly appreciated.

Outline of the RFA Requirement

The RFA, or ‘Report of Foreign Assets,’ is a legal obligation for individuals designated as tax residents in Japan (excluding non-permanent tax residents). The requirement mandates individuals to declare any foreign assets valued at 50 million yen or more, as of December 31st of the preceding year. Thus, for the year 2023, this declaration pertains to assets held as of December 31, 2022.

Filing Deadline

The deadline for submission of the RFA is the last day of June each year. If this date happens to fall on a weekend, the deadline shifts to the following Monday. Consequently, for 2023, the final date to file your report is Monday, July 1, 2024.

Additional Reporting Requirements

It is essential to understand that the RFA is not the sole reporting requirement applicable to tax residents. There exists another obligation known as the ‘Report of Assets and Liabilities,’ which requires reporting worldwide assets and liabilities for taxpayers whose circumstances meet specific thresholds. However, this additional requirement will not be discussed in detail on this page, though it is referenced by the National Tax Agency (NTA).

As a guideline, individual taxpayers who are mandated to file income tax returns and have a net income exceeding 20 million yen for the tax year, must also adhere to the following conditions:

1. Worldwide Assets: If the taxpayer holds worldwide assets with a gross fair value of 300 million yen or more as of December 31st of the previous year, reporting is required.

2. Exit Tax: If they possess assets subject to exit tax amounting to 100 million yen or more as of December 31st of the previous year, the reporting is likewise necessary (PWC 2015).

Reference Documents

For further information, the following resources are valuable:

1. The NTA’s English explanation for 2023, found in the ‘Report of Foreign Assets’ section.
2. Document No. 7456 from the NTA that details the reporting obligation (available in Japanese).
3. NTA resources that include instructions on how to file and links to the necessary PDF forms for submission via paper or mail, along with a comprehensive guide on required disclosures (in Japanese).
4. Presentation documents in English from PWC (2015) and KPMG (2013). Note that some information in these documents may be outdated (for instance, the filing deadline referenced as March in the 2015 PDF, which has now changed to the end of June).

Who Needs to File?

All tax residents (excluding non-permanent tax residents) whose overseas assets hold a gross fair value of 50 million yen or more as of December 31st of the previous year are required to file, even if they are not mandated to submit a tax return.

Tax Implications and Costs

Filing the RFA does not incur specific taxes or submission fees. It’s a straightforward declaration without direct financial penalties involved.

Penalties for Failure to File

It is crucial to understand that if a relevant foreign entity exchanges financial data with Japan, the NTA may already have access to your foreign financial accounts. This scenario is a part of the automated exchange procedures established under the Common Reporting Standard (CRS) program. However, the CRS does not encompass other asset types, such as tangible goods or real estate that fall under the purview of the Overseas Asset Reporting (OAR) regulations.

Potential Penalties:
According to the legal framework, failure to submit the required RFA without a legitimate justification may result in serious consequences, including:

• Imprisonment for up to one year
• A fine not exceeding 500,000 yen

However, the statute provides provisions to waive penalties in certain circumstances. Generally, penalties are unlikely to be enforced for cases where the taxpayer did not have knowledge of the requirement or simply forgot to file. In practice, penalties tend to be reserved for situations where the taxpayer expressly intended to evade tax by concealing foreign assets or where the NTA has repeatedly requested compliance, and the taxpayer has failed to respond appropriately.

Asset Valuation

It’s imperative to declare asset values based on the market conditions as of December 31st of the prior year. Accurate market valuations must be utilized for the declaration.

Submission Process

You have several options for submitting the Report of Foreign Assets:

1. Utilize the e-tax desktop software.
2. Employ commercial software designed for tax reporting.
3. Complete one of the available PDF forms from the NTA website and submit it by mail or in-person at the tax office.

How to File – Examples and Resources

The NTA provides a guide (available in Japanese) detailing precisely how to fill in each section of the report. It’s essential to provide the report in Japanese yen (JPY) using the exchange rate as of December 31. Taxpayers should refer to the exchange rates published by their banking institution or utilize archives like the MUFG site for reliable historical rates.

The submission must include the following details:

• Name
• Address
• My Number (Japanese individual identification number)
• Phone number
• Total asset amount

As specified in the NTA guide, different types of assets require unique information for reporting. Thus, it’s important to review the guide carefully in relation to each relevant asset category. The examples provided in the guide can be extremely helpful.

How AI Legalese Decoder Can Assist

Navigating legal and tax requirements can be daunting, especially when it comes to understanding terminologies and procedures that might not be familiar to everyone. This is where AI Legalese Decoder can provide valuable support. By utilizing advanced AI technology, it can break down complex legal language into easy-to-understand definitions and explanations, simplifying the filing process for individuals who may find legal jargon overwhelming.

Whether you need clarity on specific filing requirements, deadlines, or potential penalties, AI Legalese Decoder offers tailored assistance that empowers you to comply with regulations effectively. By leveraging such tools, you can ensure that your reporting is accurate and timely, ultimately mitigating any risks associated with non-compliance.

Speed-Dial AI Lawyer (470) 835 3425 FREE

FREE Legal Document translation

Try Free Now: Legalese tool without registration

Find a LOCAL LAWYER

Sure! Please provide the content you’d like me to rewrite, and I’ll be happy to assist you with your request.

Speed-Dial AI Lawyer (470) 835 3425 FREE

FREE Legal Document translation

Try Free Now: Legalese tool without registration

Find a LOCAL LAWYER

View Reference