027 Denial of calculation of action by family corporations
Family corporations are generally owned by a few family members, and it is considered to be easier to make some transactions for tax avoidance. Examples are as follows; selling at cheaper price to related companies and lending money with no interest to subsidiary companies. To prevent these actions, Corporation Tax Act 132 stipulates that they can deny actions or calculations for inappropriate tax avoidance. However, there is no solid article that says what kind and how much are considered to be tax avoidance, so it depends on the judgment of a chief of each tax office.
Therefore, the judgment is subjective, and if your family corporation plans to conduct a large scale of tax shelter, you might want to bear in mind that it is possible that they deny the calculation of action.
