Week in Insights: Japan Votes ‘Tax’ as Its Kanji of the Year

Curated by Daniel Xu

The Japan Kanji Aptitude Testing Foundation holds a national vote on what will be the kanji—that is, logographic script character—for the coming year. The winner often reflects what concept is trending among the public. This year, it’s “tax.”

Tax is much on the mind in Japan, and for good reason. A new invoicing system has had a difficult rollout, with many small businesses needing to invest in expensive point-of-sale equipment to issue compliant invoices and remain competitive.

The vote also shows uncertainty regarding tax cuts made by Prime Minister Fumio Kishida in an effort to ease economic tensions.

This isn’t the first time that tax was chosen as the kanji of the year. In 2014, it was selected amid a significant increase in the national consumption tax from 5% to 8%.

How high would tax rank in similar polls conducted around the world? With elements of the OECD/Inclusive Framework on Base Erosion and Profit Shifting set to come into effect in 2024, the results might be comparable to Japan’s.

The upcoming year is poised to herald transformations in the global tax landscape. Efforts to address challenges posed by digitalization of the economy and ensure a fairer distribution of tax revenue among countries will result in a pivotal shift in international tax norms.

Here at Bloomberg Tax, every year is the year of tax, as we dedicate ourselves to delivering expert analyses on the complexities of evolving tax policies worldwide. In other words, we were into tax before it was cool.

The Exchange—It’s where great ideas intersect.

—Andrew Leahey

Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social

Seihan Mori, the chief priest of Kiyomizu temple, displays his calligraphy of a kanji, “zei,” meaning tax, at the Buddhist temple in Kyoto, Japan, on Dec. 12, 2014.

Photographer: Jiji Press/AFP via Getty Images

Early Career Series

EisnerAmper’s Angelina Chen reflects on her first year in tax and how the community she found among colleagues has helped her transition into the working world.

Akerman’s Robert Wall offers his perspective on working in the tax field and what young professionals should keep in mind as they start their careers.

FTI Consulting’s Jared Dunkin explains how they can learn to defend their work and explain complicated concepts to the C-suite by simulating confrontations in a group setting.

State Insights

John Bonk of Marcum says Amazon’s Jeff Bezos’ decision to move to Florida should serve as a cautionary tale for states considering aggressive taxation on their wealthiest residents.

Federal Insights

Alston & Bird’s Scott Harty and Steve Penaro say the rise of tax insurance and contingent insurance in the past year shows no signs of stopping due to growing awareness of their benefits.

Former IRS crime chief Don Fort says the IRS’s near-perfect conviction rate for pandemic-related crimes likely stemmed from a combination of public awareness, trails of evidence, and a unique task force in the agency’s crime unit.

KPMG’s Daren Gottlieb, Kevin Brogan, and Chris Riccardi analyze businesses’ ability to credit qualified domestic minimum top-up taxes, based on new IRS and US Treasury guidance.

Jill Braunstein and Ashley Cohen of Abrams Fensterman discuss how companies can prepare for compliance with the new Corporate Transparency Act reporting requirements.

Peter Henderson and Irina Antonache of Moss Adams examine proposed regulations for businesses investing in production of green energy components and highlight some crucial parts for tax practitioners.

Freddie Mac’s Janea Hawkins and Truth Initiative’s Rob Falk say a simple formula to effectively acknowledge colleagues’ contributions will promote loyalty but also clue team members in to what they should keep doing.

Global Insights

Clayton Utz’s Angela Wood and Andy Bubb examine the Federal Court of Australia’s ruling that PepsiCo’s arrangements with its Australian bottler triggered royalty withholding tax, as well as consequences for MNEs in IP-intensive industries.

Aiki Kuldkepp of Grant Thornton describes the upcoming change in the tax treatment for Dutch value-added tax groups and what the impact will be for business structures.

Baker McKenzie’s Juan David Velasco and Juan Diego Fernandez analyze fiscal challenges arising from economic digitization and how Colombia has responded.

Csaba Farkas of TMF Group examines the role of artificial intelligence in accounting and tax, and suggests a practical framework for harnessing its potential while minimizing the risk of costly and reputation-damaging mistakes.

Osler’s Patrick Marley and Kaitlin Gray say Canada’s latest move to implement a digital services tax are likely to encounter political and practical challenges related to the tax itself and the OECD’s Pillar One.

Ignacio Gepp of Puente Sur looks at the hurdles to implementing the OECD’s Pillar Two initiative to introduce a fairer international tax system, including calls from countries for the involvement of the UN, which weren’t foreseen by its architects.

Columnist Corner

The differing treatment of refundable tax credits versus non-refundable tax credits under the OECD’s Pillar Two “allows a backdoor for state-sponsored tax avoidance strategies” that the Base Erosion and Profit Shifting project aimed to eliminate, Andrew Leahey says in his Technically Speaking column. He argues reform efforts must reconsider how value can be transferred to a taxpayer to reduce their contributions back to the societies where they do business.

Career Moves

Jessica Nowlin has been named vice president of tax research at Vertex.

Melissa A. Rodriguez has joined Day Pitney as a trusts and estates partner in the private client department in Miami.

Faye Kravetz has joined Aird & Berlis as a partner and member of the tax, estates, and trusts and tax controversy/tax litigation groups.

Wendy Wessel has been promoted to principal at Dark Horse CPAs.

If you’re changing jobs or being promoted, email your submission to TaxMoves@bloombergindustry.com for consideration.

News Roundup

It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team (login required).

• A tax treaty between the US and Chile, the first new comprehensive US bilateral tax pact in over a decade, has entered into force, the Treasury Department said.
• The IRS is ending an almost two-year pause as it resumes automated collection notices for all tax years, and will offer penalty relief for many taxpayers, the agency said.
• US Senate Finance Chair Ron Wyden (D-Ore.) asked for clarity from Supreme Court Justice Clarence Thomas’ attorney about his remarks about a loan the justice used to buy a luxury motor coach.
• Law-enforcement agencies, foreign governments, and financial institutions will be able to see newly disclosed information on who owns tens of millions of companies, but they’ll have to jump through a variety of hoops to get it, under a rule issued by FinCEN.

Buildings in east Santiago, Chile, on March 20, 2023.

Photographer: Cristobal Olivares/Bloomberg via Getty Images

Tax Journals

(Bloomberg Tax login required)

Tax Management International Journal

Notice 2023-80 illustrates the challenges of reconciling Pillar Two and the US federal system for the taxation of international income, say John Barlow, Rafic Barrage, Ethan Kroll, Sam Pollack, and Steven Smith of Baker McKenzie.

Now is an important time for multinational enterprises to examine their transfer pricing technology options, say Samit Shah and Tyler Gear of Grant Thornton.

The scope and complexity of recent draft legislation will create significant uncertainty and administrative work for both Canadian residents and nonresident taxpayers with cross-border business, say Patrick Marley and Okanga Okanga of Osler.

Tax Management Memorandum

Marshall Feiring and Joseph Benavides of Dentons explain the circumstances in which a real estate investment trust might benefit from claiming tax credits against its income tax liabilities.

Henry Montag of the TOLI Center East explains how to match the right type of annuities to the income needs and risk tolerances of your clients, your parents, or yourself.

Certified cost segregation professionals Alex Bagne, Malik Javed, and Rob Rahner illustrate how to utilize an asset depreciation strategy to maximize tax savings from the short-term rental loophole if the activity meets the “seven-day rule.”

Our Team

We talk about tax a lot. But you would hear much more if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.

Watching
Katharine Butler (Acquisitions Manager): “Leave the World Behind,” a new movie with Julia Roberts and Ethan Hawke. I like an apocalyptic thriller, but this one really has too many plot holes and loose ends.

Reading
Andrew Leahey (Columnist): Robert Caro’s “The Path to Power,” the first volume of what is currently a four-part biography of Lyndon B. Johnson. It’s as close to a truly complete biography as anyone can come.

Listening
Melanie Cohen (Content Editor): I’m revisiting a phase from my 20s by listening to old jazz standards by Frank Sinatra, Rosemary Clooney, Mel Tormé, and Ella Fitzgerald.

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