1. Basis of Taxation
Companies incorporated in Japan are subject to tax on their worldwide income and others are subject to tax on income attributable to Japan basis. Individual income is taxed on a calendar year basis and payable by March 15 of the immediate following year.
2. Corporate Tax
National income tax rate: 30%
Local income tax rate: 20.7% of national income tax
Enterprise tax rate: 9.6% of income (tax deductible in the year paid)
Effective tax rate for a larger company is approximately 43%.
For a smaller company, having its paid up capital of less than JPY100M, effective tax rate can be reduced by approximately 10%.
Usually tax incentives are given through tax credit or accelerated depreciation in Japan but not through reduced tax rate.
3. Withholding tax rate (non-treaty)
|
Resident |
Non-resident Individual/Corporation |
Dividends |
20% |
20% |
Interest |
20% |
15% |
Royalties/know-how |
20% |
20% |
Rents (for moveable property) |
0% |
0% |
Management fees |
10% |
20% |
Technical fees |
10% |
20% |
Directors’fees |
PAYE |
20% |
4. Residential individual tax rates
Accelerative tax rate system
Tax rate = National tax rate + Local 10%
Taxable Income of not more than JPY1,950 thousands 15%
1,950 to 3,300 20%
3,301 to 6,950 30%
6,951 to 9,000 33%
9,000 to 18,000 43%
Over 18,001 50%
5. Non-residential individual tax rates 20%
6. Goods and Services tax 5%
It is a requirement to register for GST if annual taxable output is more than JPY10M.
7. Estate duty
Same as Property tax
8. Stamp duty
Stamp duty is levied on a flat amount depending on a nature and size of each taxable transaction.
For example, in case of serving contract, JPY200 for a contract of serving charge of JPY1M or less, and JPY10,000 for contracted amount of between 5M to 10M.
9. Property tax
14/1000 of taxable value
Taxable value is approximately 30 to 40 % of fair market value for commercial and 10 to 20% for residential property
10. Income tax filing deadlines
Types of Form |
|
Deadlines |
Individual tax returns |
Residential individual |
March 15, of the immediate following year |
Individual tax returns |
Non-residential individual |
Same as above |
Blue corporate tax returns |
Companies |
Within two months after its financial year end
And can be extended by one month if so applied in advance |
Blue corporate tax returns |
Partnerships |
Within two months after its financial year end. The date should be stated in its partnership agreement, as the first instance.
Each partner’s filing due is by March 15, incase of individual and within two months when the partner is a corporation. |
11. Double Tax Agreements.
Certain payments by resident in Japan to non-residents are subject to domestic withholding tax rates.
The rates of taxes may be reduced under the terms of a double tax agreements with a treaty country as those listed below.
As at May 2008, Tax treaty covers 54 countries in Japan.
Country |
Dividend %(*) |
Interest % |
Royalties % |
China
Indonesia
India
Korea
Malaysia
Thailand
Philippines
Singapore
Vietnam
Austria
Canada
USA
UK
Italy
Germany
France
Soviet
Netherlands
South Africa
Spain
Swiss
Sweden
Brazil
Australia
New Zealand |
10(0)
15(10)
15(0)
15(5)
15(5)
0(15)
25(10)
15(5)
10(0)
20(10)
15(5)
15(10)
15(10)
15(10)
15(10)
15(0)
15(0)
15(5)
15(5)
15(10)
15(10)
15(5)
12.5(0)
15(0)
15(0) |
10
10
10
10
10
10
15
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
12.5
10
0 |
10
10
20
10
10
15
25
10
10
0
10
10
10
10
10
10
0
10
10
10
10
10
12.5
0
0 |
(*) is a rate applied between the parent-subsidiary company, where payer is a company in Japan.
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