Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Japan
New tax reform: No specific information
New tax treaties:
- Revision of the tax treaty between Japan and Pakistan.
- Tax treaty between Japan and Lithuania is signed.
- Tax treaty between Japan and Latvia enters into force.
- Tax treaty between Japan and Russia is agreed but not signed yet.
Local tax advisors
No specific information on the local tax advisors.
Local tax administration
Website Tax administration: Click here
The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Dependent agent who habitually concludes contracts in the name of a non-resident company (except is the activity is limited to purchase of goods);
- Building site, construction, assembly or installation and any related supervisory activity, for a period of 1 year.
The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention. As per article 4 of the OECD Model Tax Convention, a person is treated as resident of a contracting state if he is liable to tax in such a country by virtue of his domicile, residence or place of management or any other similar criterion.
Entities are considered to be resident for tax purposes in Japan if their place of management & control is in Japan.
However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 23.4%.
Small companies (capital less than around 900kUSD) are taxed under a reduce progressive CIT tax rate (up to 15% on the first 72kUSD of taxable profit and 23.4% over).
Note: the effective tax rate including national and local tax rates is 34.81%.
Non-taxable income includes the following:
- Dividends (participation exemption)
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
- Fines and penalties
- CIT and similar taxes (including foreign withholding taxes)
- Late interest penalties related to payment of taxes
Carry forward : Yes 9 years, but some restrictions may apply.
Carry back: No in general, but in some exceptional cases there could be a possibility of carry back.
Companies should submit the tax return annually within 2 months after the closing date.
Annual tax returns are established by the company on a self-assessment system.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Japan are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 20%.
The general rate of WHT on interest is 20% on loans and 15% on bonds.
The general rate of WHT on Royalties is 20%.
The general rate of WHT on management fees is 0%.
The general rate of WHT on technical services is 20%.
Capital gains are taxed as general income under the regular CIT.
Consumption Tax (there is no properly a VAT)
Standard consumption tax rate is 8%
Zero-rated supplies include, subject to certain conditions:
- exports of goods;
- Export of supplies;
Exempt supplies include, subject to certain conditions:
- Certain financial transactions
- Insurance services
- Training and education
- Certain international postal services
No other specific information on refunds of Consumption tax in Japan.
No other specific information on consumption tax in Japan.
The general statute of limitation is 5 years starting at the end of the year in which the tax return had to be filed.
The statute of limitation is extended to 7 years for tax evasion.
In general, there is no foreign exchange control in Japan.
There are thin capitalization rules in Japan. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios.
Do not hesitate to share your experience in Japan with us in the comments below. Any comments are welcome !