Provisional Translation
| OTO No. | 482 | Classification | MOF-84 |
|---|---|---|---|
| Date of Acceptance | June 22, 1992 | Ministry/Agency Receiving Complaint | Economic Planning Agency |
| Responsible Ministries | Ministry of Finance | Related Laws | Income Tax Law |
| Complainant | The Japan and America Chamber of Commerce (proxy complaint) | Exporting Countries | |
| Subject | Clarification of withholding tax provisions relating to the import of computer software | ||
| Details of Measures | According to Article 161 Section 7 of the Income Tax Law, fees for use of industrial ownership rights and copyrights are subject to a withholding tax in Japan. The meaning of the word "software" is not specifically established and since the content of the software is not necessarily clear, the National Tax Authority verifies each case individually and determines whether fees for use of industrial ownership rights and copyrights under Article 161 Item 7 of the Income Tax Law apply. Because of the lack of a clear definition of "software, " it is difficult to state beforehand which software is subject to the withholding tax and which is not. For example, it is clear that computer programs are works falling under the Copyright Law, and that compensation for the use or sale of such programs by persons granted the right to reproduce or sell them by the copyright holder constitutes a usage fee. Accordingly, the word "software" clearly applies not only when compensation is paid for its use, but is used in a broader sense, and as mentioned above, the meaning of the word "software" is not necessarily always clear. The complainant was advised to consult the relevant tax office based on concrete examples, when in doubt as to whether compensation constituted the usage fee in question. |
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| Classification of Processing | D | Directions | I-b |
| Remarks | |||