Overview of Special tax regulation for professional sports teams in Japan
Japan has special tax regulation for professional sports clubs. This tax regulation was made for professional baseball teams at first in 1954. Baseball is the first professional sports in Japan. Historically they are managed by big companies which had economic power at that time.
Additionally baseball business was thought as fully advertisement activities by owner companies. The business model has been not profitable. Normally baseball teams made deficits to operate their team. Because owner company put its company name on the team name and they are always main sponsor of the team.
In that meaning the main income comes from the owners sponsorship. It have made baseball business not profitable. Normally other sponsor companies don’t want to bigger sponsorship than the owner company. Additionally match day revenue is not enough to cover the team costs, because the deficit condition was normal in baseball team, so almost all baseball team made their budget deficit…
The tax regulation is made to give advantage this business structure in professional baseball business. The owner company can use the deficit of its baseball team as advertisement cost for its financial statement. It makes tax deduction effect. Here is the regulation in National Tax Agency Japan.
The definition expanded from 1990s
After J league started in 1993, Mr. Saburo Kawabuchi, the first chairman in J league, discussed with National Tax Agency Japan unofficially, then it allowed to adapt the special tax regulation to J clubs as well. J clubs and their owner companies can have apply this regulation unofficially.
Corona crisis happened in 2020. J League tried to make the regulation official for J clubs to rescue their sponsorship deal. Mr. Masaaki Kimura, one of board members in J league, convinced National Tax Agency Japan officially. It resulted in that J club can use this special regulation officially from 2020. And this regulation can be applied to professional basket ball teams as well. This whole action is a big movement in sports industry in Japan.