Overview

Blue filing (青色申告) approval provides significant tax benefits: 10-year loss carryforward (欠損金の繰越控除), loss carryback refunds (繰戻還付), and immediate expensing of small depreciable assets (少額減価償却資産). To apply from the first fiscal year, submit within 3 months of incorporation or by the day before the first fiscal year-end, whichever is earlier.

Schedule

Event-triggered: Earlier of 3 months after incorporation or the day before the first fiscal year-end

Applicability

• Applicable to: Kabushiki Kaisha (KK), Godo Kaisha (GK)

Authority

Filing Methods

Additional Details

Blue filing approval (青色申告) provides these key tax benefits: • Loss carryforward (欠損金の繰越控除): Losses from fiscal years with filed returns can be carried forward for 10 years and deducted from future income • Loss carryback refund (欠損金の繰戻還付): Request refund of corporate tax paid in the prior fiscal year • Immediate expensing of small assets (少額減価償却資産): Depreciable assets under ¥300,000 can be fully expensed (up to ¥3,000,000 total per year) Without blue filing, the company defaults to white filing (白色申告) and loses all these benefits. For newly established corporations, there is virtually no reason not to file this. It is one of the most important documents at incorporation. Bookkeeping must follow proper double-entry bookkeeping principles (複式簿記).

Penalties for Non-Compliance

There is no penalty for not filing the blue return application itself, but the company will default to white filing (白色申告), losing loss carryforward and other significant tax benefits — a substantial disadvantage in practice. Once approved, the blue filing status may be revoked under certain conditions, such as failure to file on time for two consecutive fiscal years (Corporation Tax Act Article 127).

Legal Basis