1. Accounting and Tax system in Japan

2. CEO ／ Yasunari Kuno & Company Profile CEO/ Yasunari Kuno - Japanese CPA- 1965 Born in Aichi Prefecture 1989 Graduated from Shiga University (Economic Dep.) 1990 Entered Price Waterhouse (Audit Dep.) 1998 Established Yasunari Kuno CPA Firm 2007 Tokyo Consulting Firm Co, Ltd. Company Profile Head Office: Tokyo (Tokyo Consulting Firm Co, Ltd.) Branch: Yokohama, Nagoya, Osaka, Fukuoka Subsidiaries: Tokyo Consulting Firm (Hong Kong) Co, Ltd Tokyo Consulting Firm Private Ltd.(New Delhi) Total Staff: 425 Ⓒ 2007 Tokyo Consulting Firm Private., Ltd. All rights reserved

3. Accounting Regulation “Triangle System” in the accounting system 1. The Corporation Law 2. Corporation Tax Law 3. Financial Instruments and Exchange Law Ⓒ 2007 Tokyo Consulting Firm Private., Ltd. All rights reserved

4. Law Corporation Law Corporation Tax Law Financial Instruments and Exchange Law Authorities Ministry of Justice National Tax Agency Financial Services Agency Purpose Protect the interests of shareholders and creditors Fairness and certainty of taxation Protect the interests of investors Scope Companies Listed Companies Accounting system Ⓒ 2007 Tokyo Consulting Firm Private., Ltd. All rights reserved

5. Some instruction for Incorporation in Japan The minimum paid capital is one Japanese Yen One promoter, One shareholder, One Director are required and one director has to have certificates of residence and a seal impression. No discrepancy on Tax ratio between Foreign company and Japanese company in Japan. No benefit rule for Foreign Direct Investment Ⓒ 2007 Tokyo Consulting Firm Private., Ltd. All rights reserved 5

6. 6 6 Some main taxation in India and Japan Central TaxLocal Tax IndiaJapanIndiaJapan Direct Tax Income Tax (individual, corporation) Minimum Alternate Tax Fringe benefit tax Corporation Tax Income Tax Withholding Income Tax Inheritance Tax Gift Tax Business Tax Inhabitation Tax Indirect Tax Excise Duty Customs Duty Service Tax Central Sales Tax Consumption Tax Local Sales Tax Value Added Tax Stamp Duty Entry Tax Consumption Tax

7. Taxations on Companies and Individuals in Japan Major taxes Company  Corporation tax ( 法人税 ) – National  Business tax ( 事業税 ) – Local  Inhabitant tax ( 都道府県民税等 ) – Local  Consumption tax ( 消費税等 ) – National & Local  Withholding Income tax ( 源泉所得税 ) – National Individual  Income tax ( 所得税 ) – National  Business tax ( 事業税 ) – Local  Inhabitant tax ( 都道府県民税等 ) – Local  Consumption tax ( 消費税等 ) – National & Local  Inheritance tax ( 相続税 ) – National  Gift tax ( 贈与税 ) - National

8. Corporation Tax Rates in Japan Tax Rates  Corporation tax: 30% of taxable income  Business tax: 9.6% of taxable income  Inhabitant tax: 20.7% of the corporation tax (+ Per Capital Tax (70,000yen-)) ↓ Effective Rate about 40%

9. Corporation Tax Return and Tax payment Interim tax return and interim tax payment File and pay within two months from the end of the sixth month of the fiscal year Final Tax Return and final tax payment File and pay within two months from the end of the fiscal year. (One month extension can be made for the filing due to audit etc.)

10. Corporation Tax loss carry forward Loss carry forward Loss carry forward (taxable loss) will be expired after 7 years

11. Tax Treaty between in India and Japan India-Japan Tax Treaty rate: DividendInterestRoyaltyTechnical Service 10% Foreign tax credit: Japanese corporations which pay foreign national or local taxes based on income may take a credit against Japanese corporation tax subject under the foreign tax credit rules. Tax Treaty: Tax treaty has been concluded between 55 countries.

12. Transfer Pricing Transaction between foreign related companies will be subjected to Japanese transfer pricing taxation.

13. Withholding Tax A company has necessity to withhold income tax for the payment of salary, professional fee, etc.

14. Individual Income Tax Income tax rate 0-1,949,000yen: 5% 1,950,000yen – 3,299,000yen 10% 3,300,000yen – 6,949,000yen 20% 6,950,000yen – 8,999,000yen 23% 9,000,000yen – 17,999,000yen 33% 18,000,000yen - 40% Inhabitant tax rate 10%

15. Individual Income Tax Source of income subject to taxation  Non-resident: Income in sources of Japan  Resident Non-permanent resident: (A resident taxpayer of non-Japanese nationality who has had domicile or residence in Japan for an aggregate period of five years or less within the last ten years.) Income in sources of Japan: Taxable Income from sources in abroad: Paid in Japan – Taxable Paid in Abroad – Remitted to Japan is taxable Permanent resident: All income is taxable

16. Individual Income Tax Schedule of tax return and tax payment  Estimated income tax prepayment Paid between July 1 st – July 31 st Paid between November 1 st – November 31 st  Final Tax Return and final tax payment File and pay by 15 th March for the prior calendar year

17. Consumption Tax  Tax rate: 5% (National tax 4% and Local tax 1%)  Tax payer Company and individual which transfers property or provides services in Japan in return for payment Company and individual who removes foreign goods from a bonded area. It is not necessary for a taxpayer to have a residence or domicile in Japan in order to be subject to the Consumption tax.

18. Consumption Tax * Schedule of tax return and tax payment  Interim tax return and interim tax payment Tax payer must file interim tax returns and make interim tax payments if the amount of Consumption tax on their return for the prior year exceeds certain limits.  Final Tax Return and final tax payment (refund) Tax payer must file and pay within two months after the end of tax periods. (Generally refund will be made within two months after the filing)