Japanese Tax Affairs

Taxes imposed on corporations in Japan are roughly as follows.

1.Corporation Tax (national tax)

The tax amount is calculated by multiplying the company’s income (≈ profit) by the tax rate. Corporation tax is not imposed on companies with no income or less. Filing a blue return allows you to carry over your loss for 10 years.

2.Corporate Inhabitant Tax (local tax)

Corporate inhabitant tax is divided into Tokyo inhabitants tax and ward tax (of Tokyo) that are imposed on corporations. The tax amount is calculated by multiplying the corporation tax rate by the inhabitant tax rate (7.0% for corporation tax amount of 10 mn yen/year or less).

3.Business Tax etc. (business tax and special business tax)

This tax is imposed on running a business. The tax amount is calculated by multiplying your income by the corresponding tax rate.

For a company capitalized at 100 mn yen or less, a total of the aforementioned taxes 1 through 3 is roughly as follows.

The effective tax rates are slightly lower than these figures.

4. Consumption Tax

Consumption tax is imposed on the sale of articles and compensation for services. Although this tax is eventually borne by consumers, it is paid by business operators (companies).