Section 3. Taxes in Japan

Section 3. Taxes in Japan
3.1 Overview of Japanese corporate tax system for investment in Japan

3.1.1 Neutrality of tax system with respect to mode of business presence (branch or subsidiary)

Corporations engaged in economic activities in Japan are subject to taxes in Japan on the profits generated by those economic activities. Steps have been taken, however, to ensure that the tax system does not impose unfair burdens on multinational corporations engaged in economic activities in Japan on the basis of the mode of their business presence in Japan.

Income of corporations established in Japan is, as a rule and with the exception of certain non-taxable and tax-exempt income, subject to taxation, regardless of where it was generated (i.e., the source country of income), but when that income includes profits earned in foreign countries that are taxed in the source countries of that income, foreign tax credits are available whereby taxes paid in a foreign country may be credited within certain bounds against Japanese taxes owed for the purpose of eliminating double taxation between the source country of income and Japan.

Regarding Japanese branches of foreign corporations, measures such as only certain income is subject to taxation in Japan, have been implemented to avoid international double taxation in Japan. The scope of taxable income of Japanese branches of foreign corporations has changed significantly from the business year commencing on or after April 1, 2016, and Japanese branches, head office, etc. shall be respectively deemed to be an independent corporation and subject to taxation. Due to this, the income of a Japanese branch subject to taxation will be the income attributable to the Japanese branch (permanent establishment) which is the income earned by the Japanese branch on the basis that if the branch is deemed to be a company which is separated/independent from the head office, etc. as well as other prescribed income. When calculating the income attributable to the Japanese branch (permanent establishment), the profits/losses from the internal transactions between the branch and head office, etc. are to be recognized based on the presumption that transactions are conducted with the arm's length prices. With the change in the scope of taxable income of Japanese branches (permanent establishment), new foreign tax credits have also become available to foreign corporations. When the income that the Japanese branch (permanent establishment) has earned in a third country which is attributable to the Japanese branch (permanent establishment) is taxable in the third country, foreign tax credits are available whereby taxes paid in the third country may be credited within certain bounds against Japanese taxes owed to avoid international double taxation.

3.1.2 Withholding at source and self-assessment/payment

Multinational corporations engaged in activities in Japan that earn income subject to taxation in Japan calculate and pay the taxes owed through withholding procedures or self-assessed income tax procedures according to their form of corporation and type of income.

Section3: Table of Contents


Section3:Documents businesses are required to submit to authorities

Section3
(Section1)
Documents Where documents are listed within the URL Reference The competent authorities
relating to the document
3.3.1
(1.6)
Notification of Incorporation of a CompanyExternal site: a new window will open See National Tax Agency
Guidelines 1. Notification of corporation establishment
National Tax AgencyExternal site: a new window will open
3.3.1
(1.6)
Notification of Incorporation / Establishment of corporation
(for submission to Tokyo Metropolitan when establishing an office in Tokyo)
ReferencePDF File(364KB) Tokyo Metropolitan Government
Bureau of taxationExternal site: a new window will open
3.3.1
(1.6)
Notification of Incorporation of a Company (for submission to municipalities) ReferencePDF File(401KB) Local municipality offices
3.3.1
(1.6)
Notification of a foreign companyExternal site: a new window will open See National Tax Agency
Guidelines 2. Notification about Becoming Foreign Ordinary Corporation
National Tax AgencyExternal site: a new window will open
3.3.10(3)
(1.6)
Application for Blue Form ReturnExternal site: a new window will open National Tax Agency
Guidelines 6. Application form for Approval of Filing Blue Return
National Tax AgencyExternal site: a new window will open
3.4.2
(1.6)
Notification of Establishment / Relocation / Discontinuance of Salary Paying Office etc.External site: a new window will open See National Tax Agency
10. Notification of Establishment/
Relocation/Closure of a Salary-paying office
National Tax AgencyExternal site: a new window will open
3.3.10(1)
(1.6)
Application for Special Provision for Extension of the Due Date for Filing a Final Tax ReturnExternal site: a new window will open See National Tax Agency
5. Application for Special Provision for Extension of the Due Date for Filing a Final Return Form
National Tax AgencyExternal site: a new window will open
3.3.1(1)
(1.6)
Application for Approval Made in Relation to the Special Provision for Due Dates for Withholding Income TaxExternal site: a new window will open See National Tax Agency
11. Application for Approval Made in Relation to the Special Provision for Due Dates for Withholding Income Tax
National Tax AgencyExternal site: a new window will open
3.3.10(1)
(1.6)
Notification of a Disposition of/Application for Approval of Extension of the Due Date for Filing a Final Tax Form
(for submission to Tokyo Metropolitan)
ReferencePDF File(925KB) Tokyo Metropolitan Government
Bureau of taxationExternal site: a new window will open
3.3.10(1)
(1.6)
Notification of a Disposition of/Application for Approval of Extension of the Due Date for Filing a Final Tax Return
(for submission to municipalities)
ReferencePDF File(775KB) Local municipality offices

Materials listed as ‘Reference’ contain samples of documents regarding registration, visa, taxation, personnel and labor matters that are necessary when a foreign company establishes a corporation or other entity in Japan. These documents are not published by competent authorities and therefore are not official. For those who are going through the official procedures, please obtain the latest official documents from the competent authorities and related bodies or consult a person who specializes in advising on such information and procedures.

The information contained in this documents should be used at the reader’s independent discretion. While JETRO makes every effort to ensure the accuracy of the information it provides, no responsibility is accepted by JETRO for any loss or damage incurred as a result of actions based on the information provided in these documents or provided by the external links listed on these pages.

Contact Us

Investing in Japan

JETRO Worldwide

Was this information useful?

Send