Taxation of Illegal Income and Its Cancellation: The So-called Clavis Case as Material

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  • 違法所得に対する課税とその取消し　―いわゆるクラヴィス事件を素材として―
  • イホウ ショトク ニ タイスル カゼイ ト ソノ トリケシ : イワユル クラヴィス ジケン オ ソザイ ト シテ

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As a result of the long debate on the taxation of illegal income to date, it is fair to say that the position of the prevailing theory and case law is generally well established. Under the comprehensive income concept, the prevailing view is that income derived from illegal or invalid acts should be subject to income taxation because the tax-bearing capacity is recognized. It is fair to say, however, that the debate is not mature enough regarding the rules for rectifying income taxation when illegal acts are reversed. For example, the Corporate Tax Law does not specifically provide for the treatment of a financial company that has received illegal income in the form of extra-legal interest that must be returned. Considering in accordance with the accounting standards generally accepted as fair and appropriate under Article 22（4） of the Corporate Tax Law, the decision of the Supreme Court in the Clavis case, which ruled that retrospective accounting should not be applied, is questionable. Although the rules for taxation of illegal income are not governed by Article 22（4） of the Corporate Tax Law, it would be inconsistent to argue that the said article applies only to the corrective rules for the taxation of illegal income.

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