Rough Enough? How the National Tax Tribunal and Japanese Courts Review Estimated Income Tax Assessments
Year: 2026
Type: other
Abstract: Article 156 of Japan's Income Tax Act allows a tax office to assess income by estimation (suikei kazei) when the actual amount cannot be determined, typically because the taxpayer kept no adequate books or did not show them during the audit. Courts have held that an estimation method need only have provisional reasonableness (ichio no gorisei): it need not be the most reasonable method, and the taxpayer cannot win by showing that a better method exists. By contrast, a taxpayer who wishes to displace the estimate with actual figures must prove all of the actual income and all of the actual expenses. This study asks how this asymmetric standard works in practice. Using all published tax litigation judgments (Zeimu Sosho Shiryo, published by the National Tax Agency) and all published decisions of the National Tax Tribunal concerning estimated income tax assessments, it measures (1) how dispersed the comparable-taxpayer ratios used in estimates are, (2) whether adjudicators address that dispersion when the taxpayer challenges the comparables, (3) whether the Tribunal revises estimation methods more often than the courts, and (4) whether taxpayers' actual-amount rebuttals succeed less often than their challenges to the estimation method.
Source: Open Science Framework
Author: TSUTOMU YAHAGI
Language: English
Topic: Taxation and Legal Issues
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7221644362