Will Japan's first "solar panel tax" be enacted?-Predict future trends from a legal perspective: legal system and regulations

Japan's first "solar panel tax" attracting attention

　"Mimasaka Business Power Generation Panel Tax Ordinance" enacted in Mimasaka City, Okayama Prefecture (hereinafter referred to as "Panel Tax Ordinance") ) is going to shake not only solar power generation companies in the city, but also solar power generation companies nationwide and their investors, as well as other renewable energy power sources such as wind power and their investors. increase. Ordinances by local governments are about to spread ripples over Japan's decarbonization policy.

　The 1.5°C target agreed in the Paris Agreement (an effort to limit the increase in the global average temperature to well below the level of 2°C above pre-industrial levels and to a level of 1.5°C higher than that before industrialization ), Japan and other countries around the world are taking on ambitious challenges toward decarbonization. In response, the Panel Tax Ordinance was enacted to newly impose a tax according to the area of ​​the solar panel (hereinafter referred to as "panel tax"). This is an ordinance that imposes a “renewable energy tax,” which is not a carbon tax, on business operators. There is also a trial calculation that it is equivalent to about 10% of the revenue of

　The panel tax ordinance requires the consent of the Minister of Internal Affairs and Communications, but if the Minister of Internal Affairs and Communications agrees and the panel tax is actually imposed, other local governments will However, in addition to the possibility that similar ordinances will be enacted, there is also concern that local governments may appear to impose taxes on the power generation facilities of other renewable energy projects such as wind power generation, which has finally become widespread. .

In this article, we will provide an overview of Mimasaka City's panel tax ordinance, which could shake the Japanese renewable energy market and greatly impede the realization of Japan's decarbonization policy.

1. Overview of panel tax in Mimasaka

　On December 21, 2021, in Mimasaka City, Okayama Prefecture (population of about 27,000), a non-statutory purpose tax (Article 5, 7 of the Local Tax Law) will be introduced. The panel tax ordinance to impose a panel tax was passed at the city assembly plenary session, and Mayor Seiji Hagiwara promulgated it on the same day. Mayor Hagiwara, who once served as a bureaucrat of the Ministry of International Trade and Industry (currently the Ministry of Economy, Trade and Industry) and a member of the House of Representatives, strongly advocated the introduction of a panel tax. also submitted a proposal to the city council to exempt certain small businesses from taxation, and it was approved this time. Please see our alert attached).

　The Panel Tax Ordinance defines "power generation business" as "a business that generates power using solar power generation facilities installed in the city area" and "operator" as "a person who conducts power generation business". (Article 2, Items 6 and 7), and stipulates that a panel tax will be imposed on the power generation business operator (Article 3). The same applies not only to the case of starting a power generation business in Mimasaka City, but also to the case of a power plant already in operation. The tax base (the amount of money for acts and things subject to taxation (taxable object)) is as of January 1 of each year (Article 5) of “solar power generation facilities used for power generation by businesses (Article 6, Paragraph 1), and the tax rate is 50 yen per 1m² (Article 9).

　In addition, the Panel Tax Ordinance stipulates certain small-scale facilities, such as (1) "power generation business using solar power generation equipment installed in the part that constitutes a building" such as roof-mounted solar power, (2) Power generation business using photovoltaic power generation facilities with a capacity of less than 10 kW under FIT certification, (3) Solar power generation facilities with a capacity of less than 50 kW under FIT certification, in sabo-designated areas and landslide prevention areas. Panel tax will not be imposed on businesses that do not include certain areas such as FIT certified business areas (Article 4, Paragraph 1).

　Businesses subject to the panel tax must submit a declaration to the mayor by April 30th of each year stating the total area of ​​the panel that will be the tax base on January 1st of that year. (Article 7). If the declaration is not submitted, the mayor will multiply the FIT-approved “total output of solar cells” (so-called DC value) expressed in kW by 6 (values ​​less than 1 kW are rounded down). calculation) can be regarded as the taxable standard panel area (m²) and can be taxed (if the installed capacity under FIT approval is 50 kW or more) (Article 11, Article 8, Paragraph 2 , Section 3). In addition, it is stipulated that business operators themselves can calculate the tax base using the same calculation method and declare it (Article 8, Paragraph 5). It seems that In addition, it is stipulated that tax credits up to 20% of the panel tax can be received if donations that meet certain requirements are paid to local residents, etc. (Article 10).

　In addition, in the Panel Ordinance, for some terms, the Act on Special Measures Concerning Procurement of Renewable Energy Electricity by Electricity Utilities (Act No. 108 of 2011; hereinafter "Renewable Energy Special Measures Act") Article 9, Paragraph 3 Since the definition is based on the assumption that the equipment is certified (so-called FIT certification), the draft was drafted with the intention that only solar power generation equipment that has received FIT certification is subject to the panel tax. However, the terms “operator”, “power generation business”, “solar power generation facility”, and “panel” used in the provisions that determine the tax base do not presuppose that they have received FIT certification. It is defined as a definition, and in terms of the wording, it can be read that a panel tax is imposed even on solar power generation projects that do not receive support from the FIT system (for example, those under schemes such as corporate PPAs that are expected to grow in the future). can.