Japan Tax Compliance Map

Email: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F, Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

GLA – Japan Corporate Income Tax

GLA-JP-01 GLA Tax Entity

Question from client:
Is Japan’s corporate income tax a national income tax? A local income tax? Or is there a national and local income tax?
What if the national income tax and the local income tax are levied separately or levied together?
What is the standard tax rate? What is the special tax rate?

Answer from Evershine RD:
Corporate tax is imposed at national and local levels (levied in addition to National Corporation tax).
The national tax level is National Corporate Tax.
Local tax level is Local Corporate Tax, Enterprise Tax, and Inhabitant Tax.

National Corporate Tax
Standard rate: 23.2%
Special rate: 15% on the first 8 million yen of taxable income (for company with paid-in capital not exceeding 100 million yen)

Local Corporate Tax
10.3% of national corporate tax.

 *Table 2.3.1

*Table 2.3.2

GLA-JP-02 Registration

Question from client:
Which government unit is responsible for the collection of Japan corporate income tax?
The registration of the country’s corporate income tax status, that is, the tax certificate number application procedure, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for this certificate number?
Do I need to use the industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
At the national level, corporate income tax is levied under the Corporation Tax Law.
Local corporate tax is governed by the Local Tax Law.
National Tax Agency is responsible for the administration and collection of taxes in Japan.
When submit a tax return or application form to the tax office, it is necessary to enter 13-digit corporate number as the Tax Identification Numbers (TINs).
The corporate number will assign to 1) National government organs, 2) Local public entities, 3) Registered corporations, and 4) other corporations and organization. There are no restrictions to its range of use and may be used openly by anyone.

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/Japan-TIN.pdf

If a corporation registered its establishment based on the Companies Act, its number is its Company which comprise of 12 digits plus a one-digit examination numeral added to the front.
Corporate Number is published through Internet (Corporate Number Publication Site).
Information such as trade name, address of head or principal place of business and Corporate Number will be made available to the public.

To obtain approval for the blue tax return

By 15 March of the year for which the application for filing the blue return was submitted for approval, submit the application form by hand to tax office.
For new commencement of business, due date is within two months from the date of commencement of operation.
Download the link below for form of application. https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/pdf/h28/10.pdf

GLA-JP-03 GLA Order (OD)

Question from client:
What is the order of Japan corporate income tax return (information flow determines tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit first (DF). Pay by installment first and declare later.

GLA-JP-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for Japan corporate income tax return (information flow determines the tax base)?
Filing cycle: monthly? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: website URL?

Answer from Evershine RD:
Interim tax return is required for taxable years of more than 6 months.
Due date is within two months from the day marking the end of the first six months of the taxable year.
Interim tax return is not required if the amount of the annual Corporation tax for the preceding fiscal year multiplied by 6 and divided by the number of months of the preceding fiscal year is JPY 100,000 or less.
The filing deadline for final tax return (Corporation tax, Inhabitant tax and Enterprise tax) is two months following the last day of the taxpayer’s tax accounting period.
If a corporation cannot file the final return because of specific reasons, the due date of the final return may be extended for one month.
Tax return can be paper filing or e-filing except for large-sized companies, e-filing is mandatory.
Electronic returns can be made online using the Tax Authority’s e-Tax website.
e-Tax portal (electronic filing and payment of national taxes) – https://www.e-tax.nts.go.jp/
eLTax portal (electronic filing and payment of local taxes) – https://www.eltax.lta.go.jp/

GLA-JP-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for Japan corporate income tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
A corporation must pay one-half of its corporate and local tax liability from the previous year by the end of the eighth month of the current year, but they may be reduced by the filing of interim tax returns that reflect semi-annual results of the operations.
In a case where one-half of the corporate tax liability of the previous year is 100,000 yen or less, the interim payment is not required.
The final tax payment due date is the same as the due date of filing of final tax return.
A corporate taxpayer can pay its taxes in cash at a tax office or bank, by automatic withdrawal from a bank account, or electronically.
Electronic payment can be made using the Tax Authority’s e-Tax website.
e-Tax portal (electronic filing and payment of national taxes) – https://www.e-tax.nts.go.jp/
eLTax portal (electronic filing and payment of local taxes) – https://www.eltax.lta.go.jp/

Consumption Tax – Japan Consumption Tax

VAT-JP-01 VAT Tax Entity

Question from client:
Is Japan Consumption Tax National Consumption Tax? Local Consumption Tax?
Or is there a national plus Local Consumption Tax?
What if the National Consumption Tax and Local Consumption Tax are levied separately or levied together?
What is the standard Consumption Tax rate? What is the special Consumption Tax rate?

Answer from Evershine RD:
In Japan, VAT refers to consumption tax, is a combined national and local tax.
Standard rate is 10% (comprise of 7.8% national consumption tax and a 2.2% local consumption tax)
Reduced rate is 8% (comprise of 6.24% national consumption tax and 1.76% local consumption tax).
There are also zero rate and exemptions.

VAT-JP-02 Registration

Question from client:
Which government unit is responsible for the levying of Consumption Tax in Japan?
The registration of Japan’s Consumption Tax levy status, that is, the application procedure for Consumption Tax certificate number, paper certificate number application? Or an online account application? URL?
What is the advance certificate number for applying for a Consumption Tax certificate number?
Do I need to use an industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
Japanese consumption tax is administered by the National Tax Agency of Japan.
There is no registration number for consumption tax.
A taxpayer is automatically a mandatory taxpayer if it falls within the definition.
The registration form can be filed online, using the National Tax Agency’s e-Tax website.
The taxpayer must first register as an online user before perform e-filing.
Alternatively, taxpayers can prepare the form and file the form using the commercial software specifically designed in Japanese.
The form can be filed on paper and maybe downloaded from the National Tax Agency’s website.
On registration, a taxpayer is assigned with 13-digit Corporate Number.

VAT-JP-03 WWT Order (OD)

Question from client:
What is the order of Japan’s Consumption Tax declaration (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? First declare and then pay? At the same time as the declaration and payment?

Answer from Evershine RD:
Same period (SP): Filing of VAT return and pay the taxes within two months of the end of the taxable period.

VAT-JP-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for the Japan Consumption Tax declaration (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Website URL?

Answer from Evershine RD:
Taxpayers may choose filing by quarterly tax periods or monthly tax periods.
Once a shortened tax period is applied, it cannot be changed for two years.
Filing can be made by paper (return forms are available online) or electronically (via commercial software).

VAT-JP-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for Japan Consumption Tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
OCT payment at the bank counter?
Or the above methods coexist?

Answer from Evershine RD:
Cash at tax office or at a bank using automatic withdrawals from a bank account, or internet banking. https://www.e-tax.nta.go.jp/en/index.html
Tax payment from a foreign bank account is not possible.

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Tokyo Evershine BPO Service Limited Corp.
E-mail: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

or
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Email address:dalechen@evershinecpa.com
Linkedin address:Dale Chen

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(version: 2022/03)

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