Japan Tax Guide

Japan

Currency: Japanese Yen

Foreign Exchange Control: None, some reporting requirements exist.

Accounting Principles: Japanese GAAP. Financial statements prepared annually.

Business Entities: Principally, joint stock company, limited liability, partnership and branch of a foreign corporation.

Corporate Taxation

Residence: If principal or main office is in Japan.

 Basis: Residents are taxed on worldwide income; foreign corporations are taxed on certain Japanese source income.

Rate: 25.5% corporation tax when share capital exceeds JPY 100 million, levies may apply. SME’s receive special tax rate.

Foreign Tax: Foreign tax may be credited against Japanese tax, subject to limitations. Indirect foreign tax credit is unavailable.

Other:

Tax Year: A corporation selects its fiscal year when it first begins its operations.

Personal Taxation Incentives for R&D, increasing salaries, creating jobs and doing business in certain zones etc.

Residence: Residents are taxed on worldwide income, non-permanent residents are taxed on Japanese-source income and income remitted to Japan. Non-residents are taxed on Japanese-source income (Resident if domiciled or have a residence in Japan for one year or more)

Rate: Progressive up to 50%. 2.1% surtax applies.

Capital Gains: 20% tax gains from the disposal of shares. Long-term gains from the sale of land are taxed at 20% whereas short-term gains are taxed 39%.

Other: Stamp duty: imposed on taxable documents

Real property: 1.4% annually

Inheritance tax: Progressive up to a 50%

VAT: Standard rate 8%

Member Firm: Yanagisawa and Company

Email:
Kenji Yanagisawa: kenji@yanagisawa.co.jp