I believe that many owner-managed companies appoint relatives as officers or employees and pay them salaries.
Cases like the following show why care is needed.
Two companies, including a construction company in Adachi Ward, Tokyo, and their president have been the subject of criminal complaints filed by the Tokyo Regional Taxation Bureau for allegedly concealing JPY 160 million in income and evading taxes.
"Net Construction" and its president, who is in their forties, are suspected of having concealed approximately JPY 120 million in income and evaded approximately JPY 32 million in corporate tax over the three years through the fiscal year ended April 2014. According to people involved, the president evaded taxes by methods including pretending to have paid salaries to family members who were company officers.
The rest is omitted.
This took place at the two companies in Adachi Ward, "Net Construction" and "Net Housing." JPY 160 million over three years means payments on the scale of approximately JPY 50 million a year (it is unknown how many people were involved).
The filing of criminal complaints means that the conduct was considered particularly serious.
The president presumably appointed family members with no actual duties as officers or employees and pocketed the salaries paid to them.
By the way, this president belongs to an organization called the NPO Nishiarai Kanzeikai (Japanese), which holds tax study groups.
The NPO Nishiarai Kanzeikai works to spread correct tax knowledge and raise awareness of the moral obligation to pay taxes, while also engaging in activities that contribute to society.
This president went in the opposite direction. I think associations like this are excellent, but rather than imparting questionable knowledge, I hope they will work to enlighten their members in accordance with their principles.