This article series will provide useful insights into the changing investment and innovation environment, and new business opportunities in Japan.
3.4 Overview of withholding income tax
Japan’s tax filing system is based as a rule on self-assessed income tax payment where individuals (tax payers) calculate their annual income and tax amount, and file tax returns by themselves. In addition, a tax withholding system where companies (salary payers) collect income tax on the date of payment and pay the tax on behalf of individuals (income earners), is also introduced for specific incomes. Tax withholding at source is required when payments of certain taxable income are made, whether paid to an individual or a corporation. Income subject to the tax withholding system is determined in accordance with the type of income and the classification of the recipient of that income.
3.4.1 Withholding at source and payment procedures
Persons/companies who pay income subject to withholding at source must pay the taxation office the amount of tax withheld at source no later than the 10th day of the month following that the income was paid. However, when a payer with a domicile or business office in Japan pays income to a non-resident or a foreign corporation in another country, it must fill out the required items on the tax payment slip and pay the withholding tax by the last day of the following month. Regarding withholding tax paid on residents’ salaries, certain professional fees, a special measure is provided for small businesses with fewer than 10 persons on the payroll that allows them to pay withholding tax in six-month installments twice a year (by July 10 and by January 20).
3.4.2 Withholding tax on residents (individuals)
Payments made in Japan of the following or other prescribed income to residents are subject to withholding at source:
- Interest
- Dividends
- Salary, wages, bonuses and similar compensation
- Retirement allowances
- Compensation, fees, etc., to certain professionals
3.4.3 Withholding tax on domestic corporations
Payments made in Japan of the following or other prescribed income to domestic corporations are subject to withholding at source:
- Interest
- Dividends
3.4.4 Withholding tax on non-residents and foreign corporations
Upon the payments made in Japan of the prescribed domestic-sourced income described in 3.2.1 (4) or (5) above to a non-resident or a foreign corporation, or such payments made overseas by payers with a domicile or business office, etc. in Japan, tax should be withheld. Of these payments, payments of certain categories of income as prescribed for non-residents and for foreign corporations to a non-resident or a foreign corporation with a permanent establishment within Japan are exempt from withholding taxation, provided that a certificate from the taxation office is presented to the payer attesting that the income will be attributed to that permanent establishment and will be added to business income subject to self-assessment for tax purposes.
Laws and Regulations on Setting Up Business in Japan Pamphlet
The pamphlet "Laws & Regulations" is available in PDF, and outlines basic information about laws, regulations and procedures related to setting up a business in Japan. It is available in 8 languages (Japanese, English, German, French, Chinese (Simplified), Chinese (Traditional), Korean and Vietnamese).
You can download via the "Request Form" button below.
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 Corporation Establishment | See Guidelines 1. Notification of corporation establishment | National Tax Agency |
3.3.1 (1.6) |
Notification of Corporation/Branch Establishment (for submission to Tokyo Metropolitan when establishing an office in Tokyo) | See "1.Notification of Incorporation (example form)" under the "Duties" headline. | Tokyo Metropolitan Government Bureau of Taxation |
3.3.1 (1.6) |
Notification about Becoming Foreign Ordinary Corporation | See Guidelines 2. Notification about Becoming Foreign Ordinary Corporation | National Tax Agency |
3.3.10(3) (1.6) |
Application Form for Approval of Filing Blue Return | See Guidelines 6. Application form for Approval of Filing Blue Return | National Tax Agency |
3.4.2 (1.6) |
Notification of Establishment/Relocation/Closure of a Salary-Paying Office |
See Guidelines 10. Notification of Establishment/ Relocation/Closure of a Salary-paying office |
National Tax Agency |
3.3.10(1) (1.6) |
Application for Special Provision for Extension of the Due Date for Filing a Final Return | See Guidelines 5. Application for Special Provision for Extension of the Due Date for Filing a Final Return Form | National Tax Agency |
3.4.1 (1.6) |
Application for Approval Made in Relation to the Special Provision for Due Dates for Withholding Income Tax | See Guidelines 11. Application for Approval Made in Relation to the Special Provision for Due Dates for Withholding Income Tax | National Tax Agency |
3.3.10(1) (1.6) |
Notification/Application Form for the Extension of Submission Deadline to File Tax Statement (for submission to Tokyo Metropolitan) | See Tax (Metropolitan Tax) section "2.Notification/Application for Extension of Time to File Tax Statement (example form) " under the "Duties" headline |
Tokyo Metropolitan Government Bureau of Taxation |
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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