This guide covers the Business Tax (事業税) component of Japan's Zeirishi (tax accountant) examination, with emphasis on enterprise-tax foundations, base classification and adjustments, apportionment, and applied client scenarios. It is an independent English study preview containing explanatory sections, an integrated written-style practice task, and 20 supporting-knowledge MCQs; the MCQs are not a simulation of the written exam. Current examination availability, official scope, rates, thresholds, and logistics should be confirmed with the National Tax Agency (NTA). The material is subject to review against current law and official guidance because the exact current syllabus and examination format may change. Start with the taxpayer and jurisdiction, build the correct base, apportion any multi-prefecture amount, then apply only the rate supplied in the facts. The MCQs are supporting knowledge checks; the written exam requires open explanation and calculation, so use the integrated task and rubric for representative practice.
What the written paper actually tests
The subject rewards accurate explanation and transparent calculation, not recall of slogans.
The written subject is built around explanation and calculation. In representative past papers, candidates must explain rules and compute tax payable to named prefectures, including interim filings and individual-business cases. The expected chain is: state the rule, identify the facts, adjust the base, apportion, apply the given rate, and explain the result. Treat historical point labels as illustrative, not as current official weightings or format.
Study guidance for the subject commonly emphasizes the individual business tax base and calculation; the value-added base and its components; comparison of 外形標準課税 (form-based corporate taxation) and 収入金額課税 (revenue-based taxation); and corporate calculations such as capital and insurance examples. These are study themes, not proof of a current official weighting.
The 20 MCQs in this package check supporting knowledge. They are not a simulation of the written exam, which requires open explanations and calculations. Section 8 gives a representative open task and rubric.
Map the taxpayer, jurisdiction and component
Separate who is taxed, by which prefecture, and on which base before touching arithmetic.
Enterprise tax is a prefecture-level tax on conducting business. Past papers use both individual and corporate taxpayers and named prefectures. A national tax such as corporate tax is a different levy with a different base and administration. Do not merge the two in an answer.
For an individual, the relevant component is business income from designated business activities. Employment income is not business income and is excluded from the enterprise-tax base. For a corporation, the sources refer to multiple components: income split (所得割), value-added split (付加価値割), capital split (資本割), and, for some activities, revenue split (収入割). Exact applicability, thresholds and rates require current-law confirmation.
A practical map is: taxpayer → prefecture(s) with taxable nexus → component(s) → base → apportionment → rate → tax. If any link is missing, write the assumption and do not silently invent a rule.
Build the income base from business profit
Start with the accounting or tax profit figure and adjust only with identified items.
For the income component, the measure is adjusted business profit, not gross receipts. Gross receipts can help explain activity, but expenses and adjustments determine the base. In an exam answer, use a three-column schedule: item, amount, reason. Begin with profit before the enterprise-tax adjustment; add back items that are not allowed; deduct items that are allowed as base reductions.
Worked scenario: assume accounting profit is 8,000,000. The accounts include 300,000 of enterprise tax and 500,000 of director compensation that is disallowed for this base. A carryforward loss of 1,200,000 and a dividend deduction of 400,000 are available. Base = 8,000,000 + 300,000 + 500,000 − 1,200,000 − 400,000 = 7,200,000. If an illustrative rate of 3.5% is supplied, tax = 7,200,000 × 0.035 = 252,000. The 3.5% is used only for this exercise; it is not asserted as a current rate.
Payroll, interest, rent and officer compensation data often appear. Do not assume every accounting expense is accepted unchanged, and do not deduct the same item twice. A deduction reduces the base; an add-back increases it. Neither is a tax credit unless the facts say so.
Value-added and other corporate bases
Different components answer different questions; keep their bases separate.
Value-added base is not the same as accounting profit. The 2019 points list remuneration, net interest, net rent, single-year profit and an employment-stability deduction as elements to study. A useful working formula is: value-added amount = remuneration + net interest + net rent + single-year profit. If an employment-stability deduction is allowed, taxable value-added base = value-added amount − applicable deduction. Confirm current rules before professional use.
Worked scenario: suppose remuneration is 600,000,000, net interest 144,000,000, net rent 96,000,000, and single-year profit 80,000,000. Value-added amount = 600m + 144m + 96m + 80m = 920m. If a fact allows a 20m stability deduction, taxable base = 900m. If apportioned 70% to Prefecture A, A's base is 630m. Applying an illustrative 1% gives 6.3m. Again, the rate is hypothetical.
Capital split uses a capital measure; revenue split uses a revenue measure for the activities to which it applies. Do not apply an income-base add-back mechanically to every component. A payroll item may belong to the value-added discussion while a capital item belongs to the capital discussion.
Apportionment across prefectures
Allocate the total base by the stated factors; do not assign everything to the head office.
Multi-prefecture businesses need an allocation. Practice problems give payroll, employee counts, offices, and sometimes interest or rent by location. They also include new, closed, or mid-year offices. The exam expects a transparent schedule: total base, factor percentages, weighted factor, allocated base, rate, tax by prefecture.
Worked scenario: total base 12,000,000. The stated weights are 60% payroll and 40% employee count. Prefecture A has 70% of payroll and 50% of employees. A's share = 12,000,000 × [(0.60 × 0.70) + (0.40 × 0.50)] = 12,000,000 × (0.42 + 0.20) = 7,440,000. At an illustrative 3%, A's tax is 223,200. B receives the remainder unless another factor changes.
Use month-end counts only for months an office exists when that is the stated convention. A new office does not automatically get a full-year count; a closed office does not automatically disappear from the whole year. Show the months used. If the facts describe foreign and domestic operations without clear accounting separation, flag the allocation judgement rather than forcing a single unexplained number.
Individual business tax and family labour
Tax the business income of the sole proprietor, not the owner's salary or the family's wages as separate business income.
For an individual, start with revenue from each business and deduct necessary expenses permitted for enterprise tax, then make adjustments. Employment salary received by the individual is outside the business-income base. If the individual runs a restaurant and also works as an employee, the two streams must be separated.
Worked scenario: restaurant revenue is 9,000,000; necessary expenses before family wage and blue-return deduction are 3,000,000. For income tax, the accounts may also deduct a 500,000 family wage and a 650,000 blue-return deduction. For enterprise tax, do not automatically carry those deductions across; suppose for this exercise they are not allowed for this base, so add them back. Starting accounting profit = 9,000,000 − 3,000,000 − 500,000 − 650,000 = 4,850,000; enterprise-tax business income = 4,850,000 + 500,000 + 650,000 = 6,000,000. If an illustrative 5% rate applies, tax is 300,000. The proprietor also earns 4,000,000 as an employee; that salary is excluded.
Family wages, blue-return deductions, losses, disaster-related amounts, prior-year deductions and business cessation must be supported by the facts and the applicable enterprise-tax rules. Keep a loss memorandum: origin year, amount used, remaining amount, and whether a current-year deduction is permitted. A loss is not a rate change.
Common errors and professional judgement
Most lost marks come from mixing bases and skipping the audit trail.
Common errors: treating gross receipts as the base; subtracting employment income from business income; applying a tax rate before apportionment; allocating all income to the head office; double-counting payroll or rent; treating an add-back as a deduction; using a full-year employee count for a new office; ignoring foreign operations; and stating a current rate or threshold not given in the facts. In a written answer, a clean schedule is part of the reasoning.
Professional judgement means identifying the issue, stating the assumption, applying it consistently, and noting what must be confirmed. If the facts say the foreign and domestic accounts are not clearly separated, do not pretend they are. If an office opens mid-year, show the months. If a director's compensation is disallowed for corporate tax, explain why it enters or does not enter the particular enterprise-tax base.
Integrated practice task and self-check rubric
Use a single fact pattern to rehearse the full chain from profit to prefectural tax.
Task: K Corporation operates in Prefecture A (head office) and Prefecture B (sales office). Accounting profit is 20,000,000. Add back 1,000,000 of enterprise tax and 2,000,000 of disallowed officer compensation. Deduct a 3,000,000 carryforward loss. Payroll is 40,000,000 in A and 10,000,000 in B. Employee month-end totals are 120 in A and 30 in B. Value-added items are remuneration 50,000,000, net interest 8,000,000, net rent 2,000,000 and single-year profit 20,000,000. Assume, only for this exercise, weights of 60% payroll and 40% employees, an income-base rate of 4%, and a value-added rate of 1%.
Required: (1) adjusted income base; (2) Prefecture A and B income-base shares and tax; (3) value-added amount and A/B shares and tax; (4) a note on which assumptions are hypothetical. Answer outline: income base = 20,000,000 + 1,000,000 + 2,000,000 − 3,000,000 = 20,000,000. Payroll share A = 80%; employee share A = 80%; A share = 80%, so A income base = 16,000,000 and B = 4,000,000; income tax A = 640,000, B = 160,000. Value-added amount = 50m + 8m + 2m + 20m = 80m; A share 80% = 64,000,000; value-added tax A = 640,000, B = 160,000.
Rubric, five points each: correct starting figure; correct add-backs and deductions; correct apportionment percentages and allocation; correct arithmetic and labels; explicit assumptions and no invented current-law rates. A strong answer shows the schedule, not only final totals.
Practical study sequence
Build the base, then apportionment, then written explanation under time.
Weeks 1–2: master taxpayer and jurisdiction; write one-page summaries of individual versus corporate, national versus prefectural, and each component. Weeks 3–4: drill base adjustments with a three-column schedule; invent small numbers and check arithmetic. Weeks 5–6: drill apportionment with new and closed offices and month-end counts; always show factors. Week 7: practise a 25-minute explanation and a 35-minute calculation, then review against a rubric. Week 8: mixed timed sets; keep an error log by cause: wrong base, wrong allocation, missing assumption, arithmetic.
Use the MCQs as short retrieval checks, not as the main practice. After each set, rewrite the explanation for any missed item in two sentences. Confirm current law, rates, thresholds and examination logistics separately; this preview does not establish them.
References and further reading
Use these references to explore the concepts and check the latest information from the relevant organizations.