The Responsibility of Judges in Interpreting Tax Legislation: Japan's Experience

Osgoode Hall Law Journal 52.2 (2015) : 491-512

23 Pages Posted: 14 Jul 2015 Last revised: 10 Sep 2015

See all articles by Yoshihiro Masui

Yoshihiro Masui

The University of Tokyo, Graduate Schools for Law and Politics

Date Written: July 13, 2015


This article was contributed to the special isse of Osgoode Hall Law Journal Volume 52, Issue 2 (Summer 2015) "Tax Policy for a Better Tomorrow: Intersectoral and Multidisciplinary Connections, a Workshop in Honour of Neil Brooks," Guest Editor: Tim Edgar, Thaddeus Hwong & Jinyan Li.

The purpose of this article is to uncover Japanese judges’ approaches to interpreting and applying Japanese tax legislation. The goal is to contribute a positive, rather than a normative, analysis of current Supreme Court of Japan (SCJ) tax jurisprudence. In doing so, the article demonstrates that Japanese judges indeed play a significant role in the tax law-making process.

The SCJ tends to adopt a literal approach to the interpretation of tax legislation, but with due regard to the object and purpose of specific statutory provisions. This does not mean that SCJ justices constrain their reasoning based on an originalist approach to statutory interpretation. Instead, this article argues that they make their own judgments, taking into account the plain meaning of the words as well as the purpose of the legislation.

Part I provides an overview of the constitutional origins of Japanese tax legislation, and the structure of the judiciary and tax-related tribunals in Japan. Part II examines Japanese judges’ approaches to statutory interpretation in SCJ tax jurisprudence. The section discusses cases in which the SCJ has adopted either narrow or broad interpretations of statutory language based on literal or teleological approaches to statutory interpretation. The section also examines cases in which SCJ justices have interpreted taxation provisions that incorporated concepts transplanted from private law. Part III turns to legislative and judicial responses to tax avoidance in Japan. Japanese tax legislation has a number of relatively broad Specific Anti-Avoidance Rules (SAARs) but does not have a General Anti-Avoidance Rule (GAAR). The analysis demonstrates that, overall, Japanese judges’ responses to tax avoidance are rather constrained, though more recent decisions indicate a trend toward rejecting abusive tax avoidance schemes based on rather creative approaches to statutory interpretation.

Keywords: Statutory interpretation, tax-lawmaking

JEL Classification: K34

Suggested Citation

Masui, Yoshihiro, The Responsibility of Judges in Interpreting Tax Legislation: Japan's Experience (July 13, 2015). Osgoode Hall Law Journal 52.2 (2015) : 491-512, Available at SSRN:

Yoshihiro Masui (Contact Author)

The University of Tokyo, Graduate Schools for Law and Politics ( email )

Hongo 7-3-1
Tokyo, Tokyo 113-0033
+81-35841-3131 (Phone)
+81-35841-3174 (Fax)


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