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【Company Secretary】Treatment of Directors’ Bonus

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ARK Outsourcing KK provides one-stop service mainly to Japanese branches or subsidiaries of foreign-based companies.
We often receive inquiries from our clients, asking about directors’ bonus. In this article, we will mention the treatment of directors’ bonus which can be deductible as expenses under certain conditions. 

Ken (male):      
Ken is 22 years old. He has been with ARK for a year.
(Lately, his favorite baseball team is on a roll.)
Emma (female):  
Emma is 34 years old. She is a mother of one child and a trainer at ARK.
(Her dance is so sharp, and her singing Karaoke is also cool.)
George (male):   
George is 46 years old. He has been working hard to become a paralegal.
 (He injured his leg recently, but he is getting better now.)

I heard that your husband is a present of a company. Is it true? Does it mean he can receive as much compensation as he wants at any time? I envy him!

My husband is not a president, YET! Also, did you know that there are some rules and restrictions on directors’ compensation and bonus under the Japanese Companies Act and Corporation Tax Law? Isn’t it, Geroge?

Emma, I’m always impressed with your knowledge. Are you trying to be the next company present? As you said, directors’ compensation is in general to be resolved at the shareholders meeting under the Companies Act. Directors’ compensation and bonuses are not fully deductible under Corporation Tax Law, but there are some exceptions. For example, bonuses paid to directors are deductible as expenses if the notification form of pre-determined compensation is submitted to the tax office by a certain deadline.

Managing companies as a president is so profound. It’s fun to learn a lot from one thing.

In this article, we mentioned “Treatment of Directors’ Bonus.”
Please note that this article only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.

(Reference / in Japanese)
National Tax Agency
No.5211 Compensation for Directors