Drawbacks of Not Filing Taxes in Japan

【Koshida Accounting Firm Column Date:

“One’s duty is to feel what is great, cherish the beautiful, and not accept all the conventions of society with the ignominy that it imposes upon us.”― Gustave Flaubert





Hi, my name is Taisei Koshida, and I am a certified public accountant as well as a tax accountant.


I aim to assist non-Japanese business owners who struggle with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.



If you are unsure about risks of non-filers, this blog can be helpful for you.




Lack of Social Trust

Properly filing taxes and fulfilling tax obligations are essential for gaining social trust. For instance, potential clients may verify your tax filings since engaging in business transactions with non-filers carries inherent risks. Additionally, when obtaining loans from financial institutions, you are typically required to provide financial statements and tax returns for the past three years.


Requirement for Subsidies and Grants

Proper tax filing is a fundamental prerequisite when applying for subsidies or grants.


Higher Risk of Paying Significant Taxes Due to Tax Audits

The tax office thoroughly reviews various information, including that obtained from your clients and banks. The longer the period during which you fail to file tax returns, the greater the risk of facing a tax audit and being required to pay a substantial amount in taxes.


If You Are Filing Tax Returns for Periods of Past Non-filing

Additionally, if you are filing tax returns for periods of past non-filing, it is customary to file for the last five years. For older periods where documents are unavailable, it’s typical to calculate sales and costs as accurately as possible, and to estimate expenses based on reasonable assumptions.



If you are interested in information about tax audits in Japan, please refer to the following.

How Are Tax Audits Conducted in Japan?



Our accounting firm has been actively assisting foreign business owners in Japan with accounting and tax matters. Please feel free to contact us through the inquiry form.