Effective Ways to Save Taxes When Running a Business in Japan part 2

Hi, my name is Taisei Koshida. I am a certified public accountant and 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 lawful tax avoidance in Japan, this blog can be helpful for you.

Your Company Leases the President’s Residence

Your company enters into a contract with the landlord to lease the president’s residence and then subleases it to the president. This way, at least half of the rent can be considered as an expense. However, this method cannot be applied to company houses deemed too luxurious, such as those with a floor area exceeding 230 square meters.
As well as being a company expense, it does not increase the president’s personal income. Therefore, it is a highly effective method for tax savings.

Your Company Provides a Travel Allowance to the President

If your company provides a travel allowance to the president, it not only becomes an expense for the company, but also does not trigger the president’s income tax. However, if the company provides excessive allowances, the tax office may disapprove of both the expense validity in the company and the non-taxability of personal income.

Hiring Family Members, Such as Your Wife, as Directors in Your Company

If you hire family members, like your wife, as part-time directors and pay them a salary, for instance, 80,000 yen monthly, they can still be considered as dependents. This can reduce your own taxable income, potentially lowering the overall income tax for the family.

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