Tax

Main points  

• Blue tax return forms give preferential tax treatments for fillers; 
• A registration in the local tax office is necessary; 
• The company must undertake a specific accounting procedure to be eligible. 

In Japan, Corporation tax is operated on the basis of a self-assessment system.

Further reading 

• Ministry of Finance Japan, Learning more About Taxes
• KPMG, Taxation in Japan (2024 Edition) 
• JETRO, Taxes in Japan

It is possible in Japan to complete the entire tax return filling and payment online. This solution may be very useful for a company headquartered abroad. There is however one important precondition to using online tax-services, which prevents foreign companies from using the online portals: 

Companies must have legal residence in Japan, which is necessary to obtain a digital ID/Electronic certificate.

e-Tax

www.e-tax.nta.go.jp

There is a local tax office in almost every important city in Japan. Below lists the contact information of the Regional Tax Bureaus. 

A list of the addresses of local tax bureaus is available on the website of the National Tax Agency, but only in Japanese.

The Tokyo Regional Taxation Bureau offers consultations for foreigners in English during weekdays from 9:00 to 17:00 local time. It is possible to get information by calling +81-3-3821-9070.

The following domestic business transactions are exempted from Consumption tax:

Although corporate and consumption taxation issues are those you will have to deal with in your daily business activities as an SME, there are also a number of other taxes and rules that might have effect on your business dealings.  Some of these are introduced on this page.

Personal Tax

Resident / Non-Resident Status

Foreign companies engaged in business in Japan without a physical presence, but possessing warehousing and distributing goods in Japan, may be classified as having a permanent establishment in Japan. In this situation, the company could also be subjected to direct, as well as indirect taxes like Consumption tax.

Self Assessment and Payment

Enterprises engaged in domestic transactions (excluding enterprises that are exempt from consumption tax) and parties engaged in import transactions must file and pay consumption tax on their taxable sales by the methods and procedures respectively provided for them. If the amount of consumption tax on the taxable sales of an enterprise is less than the amount of consumption tax on purchases (calculated as being deductible by the prescribed method), the shortfall is refunded by filing.

Main points

The Japanese government at various levels offers subsidies to support SMEs. JETRO provides an overview of the programmes in place.   

Tax credits

In Japan it is possible for foreign SMEs to receive tax credits for a variety of expenses such as R&D costs.  JETRO provides an overview of incentives such as tax credits. Currently, these are targeting the following areas:

Japan offers many subsidies and fiscal incentives to attract foreign investment. Businesses creating regional headquarters or R&D Centres and projects, which can create employment opportunities in the perifery of Japan, will find some of these government measures to be particularly favorable. Fiscal measures are usually determined on an annual basis and many run for a predetermined period, which is often extended.