A Review of Japan’s Latest Pillar Two Ordinance

Japan has issued three pieces of legislation to implement the Pillar Two GloBE Rules.

On, March 31, 2023, Act No. 3/2023 revised the Income Tax Act to provide for the high-level GloBE rules.

This was then followed with two further pieces of legislation:

 – On June 16, 2023, a Cabinet Order to Partially Amend the Enforcement Order of the Corporation Tax Law was published in the Official Gazette.

 – On June 30, 2023, Japan’s Ministry of Finance issued Ministry of Finance Ordinance No. 47 of 2023  amending the Enforcement Regulations of the Corporation Tax Act.

[See What Japan’s Cabinet Order on Pillar 2 Does and Doesn’t Include, Overview of Japan’s Cabinet Order on the Global Minimum Tax and Overview of Japan’s Latest Ministerial Ordinance on Pillar 2.]

The Cabinet Order of the Corporation Tax Law delegates many of the detailed aspects to a Ministerial Ordinance. 

As such, the Ministerial Ordinance ‘fleshes out’ a lot of the detailed application of the GloBE rules in Japan by inserting Articles 38-2 to 38-48 in the Enforcement Regulations of the Corporation Tax Act.

The Ordinance provides: