Basic knowledge of tax audits

What Is a Criminal Tax Investigation?

There is a type of investigation known as “Marusa.” Its formal name isA tax offense investigationa tax offense investigation, based on Chapter XI (Article 131 onward) of the General Act of National Taxes.

A tax audit (Right to inspection and questioning a noncompulsory investigation based on questioning and inspection authority) is a wholly different system in legal basis, purpose, and procedure. The two are often confused, so let us examine the statutory differences.

How do they differ?

Tax audit A tax offense investigation
basis Articles 74-2 through 74-6 of the General Act of National Taxes Article 131 onward of the General Act of National Taxes
Purpose Determining the correct amount of tax Collecting evidence of a tax offense
A judge's warrant None Generally required for on-site inspection, search, and seizureRequired(Article 132; the only exception is an urgent flagrante delicto case involving indirect national taxes where a warrant cannot be obtained—Article 135)
Relationship to criminal investigation “Must not be construed as having been granted” for criminal investigation (Article 74-8) An accusation leads to criminal proceedings (Article 155)
Advance notice Generally provided (Article 74-9) No provision

Article 74-8 emphasizes that questioning and inspection authority “must not be construed as having been granted for criminal investigation” because a separate tax offense investigation system exists.

Voluntary and compulsory aspects

Tax offense investigations also have a voluntary aspect, under Article 131(1).

Where necessary to investigate a tax offense, officials may, with respect toa suspect or a person who may provide information,take the following actions:

  • request their attendance,
  • question them,
  • inspect objects they possess or have left behind,by inspectionand
  • retain objects voluntarily submitted or left behind,taking custody of them.They may do so.

“Retention” means taking custody of items voluntarily provided by the other party. It differs from forcibly taking them.

Paragraph (2) permits inquiries to government offices or public or private organizations to request reports on necessary matters.

Compulsory powers are provided in Article 132.

Where necessary to investigate a tax offense, an official may, under a warrant issued in advance by a judge of the district or summary court with jurisdiction over the location of the official's office, conduct on-site inspections; search the bodies, objects, residences, or other places of suspects and others; seize items believed to be evidence or subject to confiscation; or conduct seizure with a recording order (meaning ordering a person who stores electronic records or otherwise has authority to use them to record the necessary electronic records on a recording medium or print them, then seizing that medium; the same applies below).

A warrant is required.This is the decisive difference from a tax audit. A warrant application must be supported by “materials indicating the existence of a tax offense case” (paragraph (4)), and the judge issues a warrant stating the offense, places to be searched, and other details (paragraph (5)).

For persons who may provide information, the proviso limits searches to cases “where circumstances are sufficient to establish the presence of objects to be seized.”

Electronic data are also covered

“Seizure with a recording order” under Article 132(1) means ordering a person who stores electronic records or similar persons to record or print them on a medium and then seizing that medium.

Paragraph (2) provides that where the object to be seized is a computer, electronic records may be copied from recording media connected to it by telecommunications lines, such as cloud storage, and then seized. Paragraph (6) requires the warrant in such cases to state the scope of recording media from which copying is permitted.

Generally prohibited at night

Under Article 148, on-site inspection, search, seizure, and seizure with a recording ordermust not take place between sunset and sunrise unless the warrant expressly permits execution at night.That is the rule.

However, an operation begun before sunset may continue after sunset if considered necessary (paragraph (2)).

What constitutes a tax offense?

The General Act of National Taxes does not itself define tax offense cases. The substantive offenses are set out in the penalty provisions of each tax statute.

For example, Article 238(1) of the Income Tax Act provides that a person who“deceit or other fraudulent acts,”thereby evades income tax or obtains a refund is subject tocustodial imprisonment for up to ten years or a fine of up to ¥10 million,or both. Under paragraph (2), where the tax evaded exceeds ¥10 million, the fine may be increased up to that tax amount depending on the circumstances.

Article 159(1) of the Corporation Tax Act prescribes the same severity of punishment: custodial imprisonment for up to ten years or a fine of up to ¥10 million, or both. Its wording addresses the representative, agent, employee, or other worker who committed the violation.

Article 238(3) of the Income Tax Act provides that a person who evades income tax by failing to file a return by the deadline, known as evasion through nonfiling, is subject tocustodial imprisonment for up to five years or a fine of up to ¥5 million,or both. This is a lighter penalty than under paragraph (1).

Bureaus with and without a separate Criminal Investigation Department

The organization responsible for tax offense investigations is prescribed in Article 443-2 of the Ministry of Finance Organization Regulations. Separate Criminal Investigation Departments exist only atthe Tokyo, Nagoya, and Osaka Regional Taxation Bureaus.It is.

Bureau Relevant departments
Tokyo Large Enterprise Examination Departments I through IV,Criminal Investigation Department
Nagoya Large Enterprise Examination Department,Criminal Investigation Department
Osaka Large Enterprise Examination Departments I and II,Criminal Investigation Department
The other eight bureaus: Sapporo, Sendai, Kanto-Shinetsu, Kanazawa, Hiroshima, Takamatsu, Fukuoka, and Kumamoto Large Enterprise Examination and Criminal Investigation Department(examination and criminal investigation in the same department)

Article 518(1) of the Ministry of Finance Organization Regulations sets the authorized number of national tax criminal investigators atno more than 1,681.This is the nationwide number.

Common practical questions

Once a tax offense investigation begins, the matter is both a tax issue and a criminal issue. Coordination with a lawyer is essential.

The stage before that, when heavy additional tax first arises during an ordinary tax audit, offers the widest range of options for consultation.

Legal basis

  • Article 74-2 of the Act on General Rules for National Taxes (Authority to Question and Inspect Concerning Investigation of Income Tax, etc. by the Relevant Official)
  • Article 74-6 of the General Act of National Taxes (Officials' Questioning and Inspection Authority for Investigations Concerning Aviation Fuel Tax and Other Taxes)
  • Article 74-8 of the General Act of National Taxes (Interpretation of Authority)
  • Article 74-9 of the Act on General Rules for National Taxes (Prior Notice, etc., of Tax Audits to Taxpayers)
  • Article 131 of the Act on General Rules for National Taxes (Inquiries, Inspections, or Retention, etc.)
  • Article 132 of the General Act of National Taxes (On-Site Inspection, Search, Seizure, and Related Measures)
  • Article 135 of the General Act of National Taxes (On-Site Inspection, Search, or Seizure in Flagrante Delicto Cases)
  • Article 148 of the General Act of National Taxes (Restrictions on Nighttime Execution of On-Site Inspection, Search, Seizure, and Related Measures)
  • Article 155 of the General Act of National Taxes (Accusations in Offense Cases Concerning National Taxes Other Than Indirect National Taxes and Related Cases)
  • Article 443-2 of the Ministry of Finance Organization Regulations
  • Article 518 of the Ministry of Finance Organization Regulations
  • Article 238 of the Income Tax Act
  • Article 159 of the Corporation Tax Act

Article headings are verified using the statutory data from the e-Gov Law Search.

This article is a general commentary based on laws and regulations as of August 31, 2026. Please obtain advice on your individual circumstances before taking action.

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