Japan: Business Environment
Registration and license tax is levied where certain property is registered, at a rate from 0.1% to 2% of the taxable basis or at a fixed amount. A share registration tax is assessed at 0.7% on the registration of new or additional share capital.
A business premises tax is levied in some cities, including Tokyo, Osaka, Nagoya, Fukuoka, etc. Companies with more than 100 employees in a designated city and/or with business premises in excess of 1,000 square metres are subject to the tax based on the usage of the business (JPY 600 per square metre) and gross payroll (0.25% of gross payroll).
Social security contributions paid by the employer amount to a maximum of 16.23%.
Family corporations are liable for an additional tax on their undistributed current earnings in excess of specified limits, with rates as follows: first JPY 30 million 10%; next JPY 70 million 15%; over JPY 100 million 20%.
Japan | OECD | United States | Germany | |
Number of Payments of Taxes per Year | 19.0 | 10.1 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 128.5 | 163.6 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 46.7 | 41.6 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Taxable Income | Rate |
Less than JPY 1.95 million | 5% |
From JPY 1.95 to 3.3 million | 10% + JPY 97,500 |
From JPY 3.3 to 6.95 million | 20% + JPY 232,500 |
From JPY 6.95 to 9 million | 23% + JPY 962,500 |
From JPY 9 to 18 million | 33% + JPY 1,434,000 |
From JPY 18 to 40 million | 40% + JPY 4,404,000 |
More than JPY 40 million | 45% + JPY 13,204,000 |
Special Tax for Reconstruction Assistance will be applied from 2013 to 2037 (to help with Tohoku earthquake disaster recovery) | 2.1% of income tax |
Local Inhabitant’s Tax | 10%, levied on a taxpayer’s prior year income. The standard annual amount is JPY 5,000. |
Non-residents' Employment Income | Flat 20.42% national income tax on gross compensation (including the 2.1% surtax; no deductions available) plus 10% local inhabitant’s tax (if registered as a resident as of 1 January of the current year). |
Foreign tax credits are provided for resident taxpayers on foreign-source income, though generally limited to the lesser of foreign income tax paid or the Japanese tax payable on the income base.
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Latest Update: September 2023