Section 3. Taxes in Japan

3.10 Handling of corporate, local, and consumption taxes depending on capital amount

Main items that have different handling in the taxation systems depending on the amount of paid-in capital or the amount of capital, etc., are as summarized below.

3.10.1 Corporate tax, corporate inhabitant tax and enterprise tax

Main items that have different handling in the taxation systems of corporate tax, corporate inhabitant tax and enterprise tax depending on the amount of paid-in capital and the amount of capital, etc., are as shown in Table 3-11 below. In order to be eligible for each special measure, various requirements, including (successive) filing of a blue form tax return, have to be satisfied. Please check the details of the requirements with tax professionals individually.

(Table 3-11) Handling of corporate tax and local tax depending on capital amount
Items Paid-in capital requirements Remarks (special measures)
Reduced corporate tax rate 100 million yen or less *1*5 Applicable to the reduced tax rate of 15% (19% if it does not fall under Capital Requirement*1 and corresponds to *5) for the part of annual taxable income of 8 million yen or less(see 3.3.2
Per capita levy on corporate inhabitant tax Depending on amount of capital, etc. *2 Taxation depending on the amount of capital, etc., the number of employees working at a place of business, etc., or a combination of these (see Table 3-3 in 3.3.2
Enterprise tax on a pro forma basis 100 million yen or less Exemption(see 3.3.3
Special tax rate for certain family corporations 100 million yen or less *1 Tax exemption on retained earnings (see 3.3.7
Carry-over of losses 100 million yen or less *1 Not applicable to the provision of the maximum amount of loss that may be deducted from income *4(see 3.3.8
Refund for carry-back of losses 100 million yen or less *1 Being able to receive a refund of the tax paid by offsetting the loss in the current business year against the income made in the previous business year (see 3.3.8
Requirement for electronic filing by large enterprises Over 100 million yen From tax year commencing on or after April 1, 2020, final tax return, interim return, amended return, and their appendices need to be submitted electronically using e-tax (see 3.3.10)
  1. *1

    The following corporations are not eligible for the special measures described in the Remarks even if their paid-in capital is 100 million yen or less.

    • A corporation that is completely dominated by a large corporation (a corporation whose paid-in capital or investment exceeds 500 million yen, a mutual company defined in the Insurance Business Law or a certain other company)
    • A domestic corporation that is completely dominated by large corporations and one of all the large corporations have all the shares of or a stake in the domestic corporation
  2. *2

    The total amount of the increase or decrease of capital etc. resulting from free capital increases or dispositions of deficits that have been made since a certain past year, which is added to or subtracted from the capital etc. prescribed in the Corporate Tax Law or other certain amount of capital etc.

  3. *3

    The amount of capital etc. is the sum of the paid-in capital and the capital reserve or the amount of investment in the case of the amount of capital etc. as of the end of a business year is less than the amount of capital and the capital reserve or the amount of investment .

  4. *4

    However, unlisted corporations and corporations in the middle of reconstruction are eligible for a deduction rate of 100% for a certain period of time regardless of the amount of paid-in capital.

  5. *5

    Corporations whose average amount of income for each business year ended within three years before the commencement date of the current business year exceeds 1.5 billion yen (Corporations excluded from preferential treatments of SME)

  6. *6

    In addition to the above, there are special measures depending on the amount of capital in the treatment of deductions of the allowance for bad debts, special provisions for taxation on entertainment expenses, various special write-offs and tax deductions.

3.10.2 Consumption tax

The main items that have different handling in the taxation system of consumption tax depending on the amount of capital are as shown in Table 3-12 below. Please make sure to check whether or not the requirements for exemption from the consumption tax are satisfied with tax professionals individually.

(Table 3-12) Handling of consumption tax depending on capital amount
Items Paid-in capital requirements Remarks (special measures)
Tax exemption for enterprises Less than 10 million yen Tax exemption when a company that has no base period, such as a newly established company, meets certain conditions(see 3.6.1
Requirement for electronic filing by large enterprises Over 100 million yen From tax year commencing on or after April 1, 2020, final tax return, interim return, amended return, and their appendices need to be submitted electronically using e-tax (see 3.3.10))

Section3: Table of Contents


Section3:Documents businesses are required to submit to authorities

Section3
(Section1)
Documents Where documents are listed within the URL The competent authorities and relevant web pages
3.3.1
(1.6)
Notification of Incorporation of a CompanyExternal site: a new window will open See 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)External site: a new window will open
See "1.Notification of Incorporation (example form)" under the "Duties" headline. Tokyo Metropolitan Government
Bureau of taxation(English)External site: a new window will open
3.3.1
(1.6)
Notification about Becoming Foreign Ordinary CorporationExternal site: a new window will open See 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 See 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 Guidelines 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 Guidelines 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
3.4.1
(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 Guidelines 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/Application for Extension of Time to File Tax Statement
(for submission to Tokyo Metropolitan)External site: a new window will open
See "2.Notification/Application for Extension of Time to File Tax Statement (example form)" under the "Duties" headline. Tokyo Metropolitan Government
Bureau of taxation(English)External site: a new window will open

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.

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