1. There are no apparent problems with granting groups that do not perform, from the point of view of the taxation system, profit-making activities (33 occupational types in accordance with the Corporation Tax Execution Ordinance) and only carry out non-profit activities with tax exemption rights that are identical with those of public service corporations.
2. When businesses are judged by the taxation system to be profit-making, these businesses shall be taxed in the same manner as other industries without the utilization of tax reductions that are used for public service corporations. However, since tax reduction rates would be the same if the annual income is 8 million yen or less, a large number of groups will not be effected by this measure.
3. Businesses judged to be profit-making from the viewpoint of the taxation system that will pose problems will be profit-making businesses that have been recognized as public service corporations that have not had "Supposed Donation" deductions approved for non-profit activities. This will develop into a major problem in the future as civilian operated groups develop into businesses.
4. While the financial gains of the funds of public service corporations are considered at present to be tax-exempt, this will not be approved. At the current time groups that possess a great deal of funds are still considered to be rather scarce and with the present development of an environment of super-low interest this will not pose much of a problem, but it will probably develop into one in the future. This will especially be a problem for corporations that have been recognized as being foundations.
5. The largest problem will the lack of tax-exemption measures for individuals and businesses that have made donations to NPO corporations. At present, social welfare corporations and educational foundations receive preferential taxation measures for donors after being automatically recognized as being specific public welfare advancement corporations while these are granted for only a small percentage of corporations and foundations (slightly over 3 percent) following strict examination by the competent authorities or the Ministry of Finance.
Even if this is utilized for NPO corporations it will be almost void of significance as only a very few corporations could be targeted with a system that does not use a competent authorities system.
6. From the point of view of preferential taxation measures for donors there is a system for specific donations other than those of the specific public welfare advancement corporation system for public service corporations and tax-exemption regulations involved in inheritance. Making it possible to apply these for NPO corporations (even if the number of applications is small) will be greatly wished for in the future.
7. A corporate resident tax (per capita rate) will be applied to corporations that have earned corporate status in the realm of local taxes. Generally speaking this comes to \70,000 for urban and rural prefectures and cities and towns, which would be a bit of a strain for small-scale groups. Almost all urban and rural prefectures and some cities and towns have stipulated tax-exemption measures regarding this with most of them adding that profit-making activities are not carried out as one of its requirements.
