Japan

Japan - Civil Law (German)
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Japan taxes

If you want to set up a company in Japan, this article will educate you on the tax laws for a LLC (GK), which is the most common company type in Japan.

Japan taxes resident companies on their worldwide income. The predominant effective tax rate for offshore income, from our research, and your results may vary, is 34.60%. The standard CIT rate is 23.4%, but there are also local, enterprise and inhabitant taxes, resulting in an income effective tax rate of 34.60% for SME and 30.62% for large companies This ranks Japan as 167th when compared to corporate tax rate worldwide.

The value added tax (VAT) rate in Japan is 8.00%, that ranks Japan as 43rd overall in terms of VAT globally. In terms of other taxation, an employer will contribute 16.25% to the equivalent of a social security fund and an employee will contribute 15.44%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 140hours. Contributing to this is the number of yearly labor tax payments, which is 2 in JP.

Thin capitalisation restrictions are officially enacted. Thin capitalisation refers to any type of laws on given company with respect todebt-to-asset ratios.
Dividends received by resident companies from another resident company are taxable. However several exemptions and reductions may apply. If recipient holds 100% of the dividend-paying corporation for a certain period or holds more than 33.3% of the shares for at least 6 months, dividends are excluded from taxable income. If recipient holds more than 5% of the shares for more than 6 months or 33.3% of the shares less than 6 months, a 50% reduction may apply. If company owns 5% or less of the shares, a 20% may apply. Dividends received from foreign companies are taxable. However, if resident company owns more than 25% of the shares for more than 6 months, a 95% exemption may apply.

Capital Gains are subject to Corporate Income Tax. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.

The dividends withholding effective tax rate is 20.42%. Which means that the relevant tax authorities expects relevant legal entities to automatically withhold 20.42% of dividends paid to non-residents. If dividends are paid by a listed company, withholding effective tax rate is 15.315%. The interest withholding tax rate is estimated at 20.42%. Which means that the taxman expects relevant legal entities to automatically withhold 20.42% of interests remitted abroad. If interests are from deposits or bonds, withholding effective tax rate is 15.315%. The royalties withholding tax rate is 20.42%. Which means that the tax authorities expects companies to withhold 20.42% of money remitted abroad on royalty payments. Withholding tax rates may be reduced under a tax treaty.
There is no known tax on wealth in Japan. There are inheritance, transfer and real property taxes in Japan. There are frequently implemented research and development tax incentives in this country.

The above is not tax or legal advice for your particular situation. Incorporations.io can help you to find to a lawyer in Japan who can answer all your questions. Click incorporate now if you are in a hurry, or press the free consultation button above.

It takes approximately 155 hours to file and prepare documents for a Japan Civil Law (German).
The corporate tax is approximately 34.6% which is 167 in the world.

Owners of a company in Japan are allowed to carry back a loss and may be allowed to carry forward a loss for 9 years.

The vat rate in Japan is 8% which ranks 42 in the world.

Patent box
RND credit
Wealth tax
Estate tax
Transfer taxes
Asset taxes
Capital duties
74Tax treaties
34.6%Offshore Tax
34.6%Corp rate
1Loss carryback years
155Corporate time
8%VAT rate
34.6%Capital gains
2018AEOI planned

Read this to learn about incorporating a company in
Japan

We can help you form a company in Japan. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Japan, which is required by law.

Japan Tax Treaties

CountryTypeDate signed
Fiji
DTC 1962-09-04
Kazakhstan
DTC 2008-12-19
Philippines
DTC 1980-02-13
Hungary
DTC 1980-02-13
Kuwait
DTC 2010-02-17
Romania
DTC 1976-02-12
United Kingdom
DTC 2006-02-02
Brunei
DTC 2009-01-20
Denmark
DTC 1968-02-03
Turkmenistan
DTC 1986-01-18
Armenia
DTC 1986-01-18
Guernsey
TIEA2011-12-06
Portugal
DTC 2011-12-19
Switzerland
DTC 1971-01-19
Bermuda
TIEA2010-02-01
Qatar
DTC 2015-02-20
United States
DTC 2003-11-06
New Zealand
DTC 2012-12-10
South Africa
DTC 1997-03-07
Moldova
DTC 1986-01-18
Liechtenstein
TIEA2012-07-05
Belgium
DTC 1968-03-28
Netherlands
DTC 2010-08-25
Saudi Arabia
DTC 2010-11-15
Russia
DTC 1986-01-18
Bahamas
TIEA2011-01-27
Slovakia
DTC 1977-10-11
Mexico
DTC 1996-04-09
Israel
DTC 1993-03-08
Luxembourg
DTC 1992-03-05
Brazil
DTC 1967-01-24
Belarus
DTC 1986-01-18
Poland
DTC 1980-02-20
Vietnam
DTC 1995-10-24
Canada
DTC 1986-05-07
Thailand
DTC 1990-04-07
Egypt
DTC 1968-09-03
Kyrgyzstan
DTC 1986-01-18
Indonesia
DTC 1982-03-03
Bulgaria
DTC 1991-03-07
Singapore
DTC 1994-04-09
Tajikistan
DTC 1986-01-18
Czech Republic
DTC 1977-10-11
Ukraine
DTC 1986-01-18
Georgia
DTC 1986-01-18
Jersey
TIEA2011-12-02
Germany
DTC 1966-04-22
Bangladesh
DTC 1991-02-28
Malaysia
DTC 1999-03-19
Italy
DTC 1969-03-20
Zambia
DTC 1970-02-19
Pakistan
DTC 2008-01-23
France
DTC 2007-01-11
Sweden
DTC 1999-02-19
Australia
DTC 2008-01-31
Cayman Islands
TIEA2011-02-07
Finland
DTC 1991-03-04
Oman
DTC 2014-01-09
China
DTC 1983-09-06
Sri Lanka
DTC 1967-12-12
Ireland
DTC 1974-01-18
Turkey
DTC 1993-03-08
India
DTC 1989-03-07
Hong Kong
DTC 2010-11-09
Macao
DTC 2014-03-13
Samoa
TIEA2013-06-04
Austria
DTC 1961-12-20
Spain
DTC 1974-02-13
Norway
DTC 1992-03-04
South Korea
DTC 1998-10-08
Azerbaijan
DTC 1986-01-18
Isle of Man
TIEA2011-06-21
Uzbekistan
DTC 1986-01-18
United Arab Emirates
DTC 2013-05-02

Country Info

National Flag of
日本 (jpn)
Currency
JPY
Area Code
+81
Capital
Tokyo
Region
Eastern Asia
Native Languages
Japanese