16. Requirements for Deducting Entertainment Expenses 交際費の定義と損金算入額

交際費について英語でまとめてみました。（国税庁ホームページ）

An overview of the requirements for deducting entertainment expenses in Japan is as follows (Source: National Tax Agency). For more about Japanese tax and accounting, click HERE:

1. Definition of entertainment expenses　交際費の定義

2. Deductible entertainment expenses　損金算入可能な交際費

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1. Definition of entertainment expenses

Entertainment expenses for Japanese corporate income tax purposes are expenses paid by a corporation to entertain, make gifts to, or carry out similar acts for, its customers, clients, suppliers or other parties related to the business (hereinafter collectively "entertain"), excluding the following:  

(1) Expenses which are generally necessary for sports days, parties, travel, etc., that are held solely to entertain the employees 

(2) Small external meal expenses

External meal expenses (i.e., meal expenses excluding those paid solely to entertain directors or employees of the company or their relatives) are excluded from the definition of entertainment expenses and are deductible as "meeting expenses" if both of the following apply:

• The amount per person is JPY5,000 or less; and
• A document including the information listed below (e.g., a receipt) is retained. 

A. Date of the meal

B. Name of the customer/client/supplier, etc., and the relationship with them 

C. No. of persons eating the meals  

D. Amount of the meal, and name and address of the restaurant 

E. Other necessary items that support the expense was used for the meal 

(3) Other expenses 

A. Expenses generally necessary to give calendars, notepads, hand fans, towels and other similar goods

B. Expenses generally necessary to serve coffee/tea, snacks, lunch or other similar food and beverage for meetings 

C. Expenses generally necessary for meetings to edit newspapers or magazines, etc., or TV programs, or interviews to collect news materials for publishing and broadcasting  

2. Deductible amounts

In general, entertainment expenses are fully non-deductible, but the following amounts are deductible: 

 
(1) Small and medium-sized enterprises ("SMEs")*

* For the purposes of deducting entertainment expenses, a company is an SME if the company has stated capital of up to JPY100 million at the end of the fiscal year. A company wholly-owned by a corporation whose stated capital is JPY500 million or more is not an SME and its deductible amount is calculated as provided for in (2).

SMEs may deduct either of the following amounts: 

A. An amount of entertainment expenses of up to 50% of external meal expenses

B. An amount of entertainment expenses of up to JPY8 million a year 

 
(2) Non-SMEs

A. Corporations with stated capital at the end of the fiscal year of greater than JPY10 billion - No deduction allowed. 

B. Corporations other than A - An amount of entertainment expenses of up to 50% of external meal expenses

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