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Company Formation Japan

Paying Taxes in Japan

Updated on Thursday 08th June 2017

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The Japanese taxation system is quite elaborated so it is advisable that the Tax authorities are checked before paying a tax. Both individuals and companies must pay a number of taxes every year and must file annual returns. Foreign residents are only taxed for the incomes earned in Japan. The permanent residents of Japan are paying taxes for the incomes gained in Japan and abroad.

Along with the permanent residents, the individual living in Japan for less than five years and the non-resident are subject to taxation. Our company registration consultants in Japan can help businessmen who are in need of tax advice and planning.

 
Income tax and property tax presented by our company formation agents in Japan

 

The individuals must pay taxes on incomes for the amount of money earned annually as following: 5 % for sums bellow 1950000 YEN, 10% for sums between 1950001 YEN- 3300000 YEN, 20% for sums between 3300001 YEN- 6950000 YEN, 23% for sums between 6950001 YEN-9000000 YEN, 33% for sums between 9000001 YEN-18000000 YEN and 40% for sums above 18000001 YEN.

 

The sale of property is charged with a 39% rate for short term earns and 20% for long time earns.


Taxes for companies in Japan

 

The corporate tax in Japan is 25,5%. The income of SME (small and medium enterprise) is charged with a 15% tax rate, as long as the income is below 8000000 YEN and the total equity is lower than 100 millions YEN.

Along with the corporate tax, the company must pay two types of local taxes: inhabitant tax and enterprise tax.

 

The social security in Japan covers the pension insurance, unemployment insurance, health insurance, etc. The rates are 15.09 % for employer and 14.3 % for employee.

The listed shares are taxed with 10 %. The tax for selling shares is usually 20%.

 

The bellow types of payment to non residents are also taxed with 20 %:  dividends, interests and royalties.

 

Some fixed assets are allowed to be depreciated for a number of years, for example the buildings: 50 years, aircrafts: 5-10 years, computers: 4-5 years, equipment and machinery: 6-22 years, patents: 3-10 years, mining rights: 5-8 years.

Other assets that cost below 200,000 YEN may be depreciated over 3 years, while an asset bought at a price bellow 10,0000 YEN is fully depreciated in the year of supply.

 
Filing anual returns in Japan

 

The companies opened in Japan are obliged to submit the annual returns and pay within two months of the tax year, with the possibility to ask for another month as extension.

 

The individuals are obliged to file annual reports if the earnings are above 20 millions YEN per year. For the employees with a salary below 20 millions YEN per year, individual tax is deducted by his employer. If the individual is self employed, than the annual return and the tax must be submitted and paid before the 15th of March.

We can help companies comply with the taxation system in Japan. Do not hesitate to contact our company registration agents in Japan for tax consultancy and company formation services.

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Call us now at +44 203 287 0408  to set up an appointment with our company formation agents in Tokyo, Japan. Alternatively you can incorporate your company without traveling to Japan.

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