Basics of Entry into Japanese Market
ホーム > 9.Japanese Tax Affairs
Taxes imposed on corporations in Japan are roughly as follows.
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.
| Income amount | 8 mn yen/year or less | Over 8 mn yen/year |
|---|---|---|
| Tax rate | 16.54％ | 25.59％ |
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).
| Income amount | 8 mn yen/year or less | Over 8 mn yen/year |
|---|---|---|
| Tax rate | 1.05％ | 1.62％ |
This tax is imposed on running a business. The tax amount is calculated by multiplying your income by the corresponding tax rate.
| Income amount | 4 mn yen or less | 8 mn yen or less | Over 8 mn yen |
|---|---|---|---|
| 税率 | 4.80％ | 7.26％ | 9.59％ |
For a company capitalized at 100 mn yen or less, a total of the aforementioned taxes 1 through 3 is roughly as follows.
| Tax | Income (≈ profit) | ||
|---|---|---|---|
| 4 mn yen or less | 4-8 mn yen | Over 8 mn yen | |
| Corporation tax | 16.54％ | 16.54％ | 25.59％ |
| Inhabitant tax | 1.05％ | 1.05％ | 1.62％ |
| Business tax | 4.80％ | 7.26％ | 9.59％ |
| Total | 22.39％ | 24.85％ | 36.80％ |
The effective tax rates are slightly lower than these figures.
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).
| Raw material provider | Manufacturer | Retailer | Consumer | |
|---|---|---|---|---|
| Sales | 600 | 1000 | 1500 | Purchase 1,500 Consumption tax 150 |
| Consumption tax | 60 | 100 | 150 | |
| Procurement | 600 | 1000 | ||
| Consumption tax | 60 | 100 | ||
| Consumption tax difference | 60 | 40 | 50 | Total 150 |
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