The purpose of this paper is to consider the meaning of "economic substance" in taxation.
In Japanese Income Tax Act （Article 12）, where a person to whom the revenue is legally imputed is merely
nominal and other person enjoys it, the tax shall be imposed on the person who actually enjoys the revenue. This is called "the Principle of taxation on Actual Beneficiary". But it is not always easy to determine the person who actually enjoys the revenue from assets or business. In such a case, there are two ways of thinking. The first is a way of thinking in which a valid private-law contract is considered more important than economic substance. The second is a way of thinking in which economic substance is considered more important than a private-law contract.
This provision（ Article 12） was enacted in 1950＇s, but opinions are divided among scholars on this point and there is room for further consideration. This paper will be considered this subject from legal and economic viewpoints.