This article examines the prevalence, determinants, and consequences of the Flexible Declaration Scheme in Japan, introduced in October 2017, which allows exporters and importers to declare transactions at a customs office where their shipments are not stored. Regarding the prevalence, our results show that the utilization rate of the Flexible Declaration Scheme increased by 27 percentage points for exports and 18 percentage points for imports over around four years after its introduction. We also show that the utilization rate varies significantly across sectors, regions, and years. Regarding the determinants, we find that customs brokers play the most significant role in explaining variations in the utilization rate relative to other factors such as partner countries and products. Regarding the consequences, we find that exporters and importers using this Flexible Declaration Scheme reduced the number of customs offices used for declarations and storage by more than 50%, suggesting that this customs procedure resulted in a consolidation of customs clearance operations.

The tax deduction system is one of the key policy issues in Japan’s income tax system. In order to understand how tax deductions affect the progressive burden structure of income tax, it is useful to understand the effect of tax deductions on burden reduction and income redistribution. In this paper, we quantitatively evaluate the burden reduction and redistribution effects of tax deductions and tax credits using tax data on income tax returns held by the National Tax Agency (2020). This paper shows that the burden reduction effect of deductions and credits is largely attributable to tax deductions rather than tax credits, and that the burden reduction effect is larger for higher income classes. This is due to the fact that the amounts of applicable deductions increase with income, especially the income-increasing portion of the employment income deduction and the deduction for social insurance premiums. The results also show that the income-increasing portion of deductions has a negative effect on income redistribution.

This study evaluates the usefulness of income tax return data, which is newly available in Japan, as a source of income statistics, focusing on its characteristics, advantages, and limitations. The large scale of the data and its accuracy constitute major advantages, but they exclude individuals who are not required to file tax returns as well as income exempt from taxation, which limit their ability to capture the whole distribution of income.

Approximately 23 million individuals file tax returns each year, with about 5 million additional individuals reported as dependents. Together, these groups account for only about 30 percent of the total population aged 15 and over. In particular, most wage earners and pensioners do not file returns, necessitating the use of supplementary information.

Among wage earners and pensioners who do file returns, many do so to claim deductions such as the medical expense deduction or the tax credits for mortgage loan interest. Given the nature of these institutions, filers are supposed to be in distinct economic conditions—such as facing illness or having recently purchased a home—which indicates a potential selection bias within this group.

By contrast, for self-employed individuals, the tax return data provide comprehensive information. The number of business income filers closely aligns with the self-employed population reported in statistical surveys, and the total reported income is broadly consistent with the national accounts data. Since more than half of self-employed filers submit returns almost every year, the tax return data are highly valuable as a panel dataset for studying the self-employed.

This study also evaluates the tax return data as a source about information on top-income individuals. For the super-rich—those in the top 0.1 percent of the population—coverage is almost exhaustive. However, when extending the focus to the top 1 percent, the presence of individuals who do not file returns becomes non-negligible. Moreover, due to the Separate Withholding Taxation system on interest and dividend income, the coverage would be less complete, which likely results in an underestimation of top-income individuals.

Future challenges include the integration of tax return data with other datasets on wage earners and pensioners to construct a more comprehensive database of incomes. To understand the entire distribution of income, comparison between tax return data and existing statistical surveys is necessary.

This paper reports the results of the analysis using the universe of the corporate tax return to show distributions of income or loss amounts and corporate income tax amounts by attributes such as capital amount, industry and family or non-family classification, and to analyze the distribution of tax loss carryforwards and other measures. Our data come from the tax returns during FY2014 to 2020. We construct panel data set considering mergers, multiple filing in a single year and missing information.

The results using our full sample, excluding consolidated corporations, foreign corporations and corporations that are closed or in liquidation, are as follows. The distribution of income or loss amounts, which are not published in the Corporation Sample Survey, suggests that noticeable bunching at the point where income is exactly 0 yen. Corporations resulting in zero loss amounts are more prevalent among corporations with capital of 100 million yen or less and less prevalent among corporations with capital of over 100 million yen. Corporations that became loss-making corporations for seven consecutive years account for approximately 36.5% of all corporations, with the proportion increasing with smaller capital. Only 1.1% of all corporations apply a loss carryforward deduction for seven consecutive years, while 21.2% of all corporations do not apply a loss carryforward deduction at all in seven consecutive years. We examine the transition between fiscal years for corporations with capital of over 100 million yen and those with capital of less than 100 million yen. The transition probability for corporations with capital of over 100 million yen that reduce their capital to 100 million yen or less in the next fiscal year ranges from just under 4% to just over 5%. On the other hand, the transition probability for corporations with capital of 100 million yen or less that increase their capital to more than 100 million yen in the next fiscal year is extremely low. Loss-making corporations have a higher probability of reducing their capital to 100 million yen or less in the next fiscal year than profit-making corporations. We clarify the number of corporations by corporate tax amount bracket to show that corporations paying over 5 million yen in corporate tax, whose share is approximately 5%, account for approximately 95% of all corporate tax. We also find that the larger the capital size of a corporation, the higher the proportion of corporations paying over 5 million yen.