Japan Tax Guide

What kind of taxes should a foreign company operating in Japan pay?

Creation date2017/09/05 Last updated2022/07/19


Question: What kind of taxes should a foreign company operating in Japan pay?

Answer: Corporations, both domestic and foreign, are subject to corporate tax(national tax) and inhabitant tax and enterprise tax(local taxes) on their income in Japan.

The total effective tax rate is approximately 30% on corporate income.

The details are as follows.

National tax

(1) Corporate tax is composed of national corporate tax and local corporate tax and imposed on corporate income for the fiscal year. Local corporate tax has been applied from the corporation’s fiscal year begining after October 1, 2014. The local corporate tax is equivalent to 4.4% of the national corporate tax. The total  corporate tax rate is approximately 24%.

Local tax

Inhabitant taxes and enterprize tax are determined by the local governments, and there is not much different in the tax rate across Japan.

(1)While inhabitant tax is computed depending on profits but corporations earned no profits also should pay  certain amount of tax based on their capitals and the number of employees. For example, a corporation located in Tokyo with capital of 10 million yen and the number of employees less than 50 should pay 70,000 yen every fiscal year.

(2) Enterprise tax is composed of taxation on per income and local corporate special tax. Both taxes are computed based on profits. However there is another taxation called Taxation of Corporation by the size of their business that is levied on corporations with capital of 100 million yen and over based on capital and other value added items such as wages, interests and rentals aside from profits. Local special corporate tax will be terminated on October 1st, 2019.

Therefore, the total tax rate mentioned above totaled approximately 30%; however, it would be subject to change depending on the capital, the number of offices, and so on.

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Question: 日本では法人はどのような税金を払わないといけないのですか?

Answer:  日本においては内国法人、外国法人とも、法人の所得に対して国税である法人税、地方税である法人住民税及び事業税が課税されます。