Frequently Asked Questions
What are the typical business expenses in Japan?
Necessary expenses when running a business in Japan are not different from those in other countries. These include labor costs, rent fees, social insurance, supplies expenses, and so on. Entertainment expenses might be relatively high because many Japanese business people are inclined to value personal relationships.
How do I navigate Japan's corporate tax system?
Taxation for Japanese companies is pretty complex. Therefore, almost all Japanese companies leave tax matters to a tax accountant in Japan.
How do I obtain the necessary licenses and permits for my business in Japan?
Administrative scriveners specialize in getting licenses and permits in Japan.
Our office specializes in tax and accounting, but we are members of a group that supports foreign people and companies starting businesses in Japan. The group includes a administrative scrivner.
How Are Business Travel Expenses Treated in Japan?
Business travel expenses can generally be treated as deductible expenses in Japan if they are considered reasonable and necessary for business purposes under normal social standards.
Typical deductible travel expenses include transportation, accommodation, daily allowances, and other costs directly related to business activities. However, expenses that are excessively luxurious or personal in nature may be denied during a tax audit.
For companies in Japan, it is also important to prepare an internal business travel expense policy (travel expense regulations). Having clear internal rules helps explain the purpose and calculation of travel expenses during tax audits and reduces tax risk.
Keeping supporting documents such as receipts, travel schedules, meeting records, and business purposes is strongly recommended.
Also, if your company has proper travel expense rules in place, it may pay travel allowances that can be treated as deductible business expenses.
Can you assist with setting up an e-commerce business in Japan?
Our office specializes in tax and accounting, but we are members of a group that supports foreign people and companies starting businesses in Japan. The group includes a web marketer and a website builder with broad knowledge of the Japanese web world.
What accounting standards are used in Japan?
In Japan, while listed companies use accounting standards that are almost international, most small companies use accounting standards for small companies. Therefore, it is rare to see allowances and provisions in a small company’s financial statement.
What are the tax obligations for foreign companies in Japan?
Corporation tax and VAT consumption tax are the primary obligations of foreign companies in Japan. The former is approximately 30% and the latter is 10%. If you’d like to know more about it, please take a look at the blog.
An Easy Explanation of Consumption Tax for Doing Business in Japan
What types of business structures are available in Japan for foreign entrepreneurs?
In Japan, many Japanese people initially start businesses as sole proprietors and incorporate them after making sufficient profit. Regarding foreign people, it is smoother to establish a company, if you must purchase a management visa. On the other hand, if you have a spouse visa, starting your business as a sole proprietor is no problem. Regarding the kinds of corporations, please take a look at the blog.
Do I need a local partner to start a business in Japan?
Opening a bank account is the most significant initial hurdle for foreign people and companies starting a business in Japan. If you have Japanese cooperation, like the company’s directors, it will be smoother at that time. Plus, if you want to run a business in Japan without staying in Japan, Japanese cooperation is essential.
How do I transfer profits from my Japanese business to my home country?
If you want to transfer profits that yield from businesses in Japan, paying dividends or directer’s fees is the way. Each way may be under double taxation. However, you can avoid it to some extent via a foreign tax deduction.
What are the costs associated with starting a business in Japan?
Starting a company in Japan usually costs around JPY 500,000 for company registration and related procedures. If you need a Business Manager Visa (commonly called a management visa), immigration support fees are often around JPY 300,000, depending on the complexity of the case.
After establishing the company, bookkeeping and tax filing are also necessary. Hiring an accounting office for ongoing support and annual corporate tax returns typically costs at least JPY 300,000 per year.
On the other hand, starting as a sole proprietor (self-employed business owner) is much cheaper because there are generally no registration fees for setting up the business itself.
The best structure depends on your visa status, expected income, business type, and long-term plans in Japan.
What are your accounting office's main services?
Our accounting office’s primary services are assisting in preparing proper accounting books, preparing tax returns that apply to tax audits and advising on proper tax savings and planning. If you want to know more about that, please refer to the page.
Koshida Accounting Office Fee Schedule
What is the Invoice System in Japan?
The Invoice System in Japan is similar to VAT systems worldwide. It determines the rule for deducting paid consumption taxes from received taxes. Taxpayers must pay this remnant as consumption taxes. If you want to know more about that, please refer to the blog.
In Japan, many specialists exist, such as lawyers, tax accountants, and administrative scriveners. Why?
In Japan, each ministry and other government agencies control each specialist who has a national license. Taxation specialists are tax accountants, visa specialists are administrative specialists, registration specialists are judicial specialists, and so on. If you’d like to know more about that, please take a look at the blog.
Do businesses in Japan need to keep invoices and receipts electronically?
Yes. Under Japan’s Electronic Record Keeping Law, electronic invoices, receipts, and other transaction records received by email or through online systems must generally be retained in electronic format. Proper record management can help businesses comply with Japanese tax requirements and prepare for a tax audit.
For more details, please refer to our blog, ” Japan’s Electronic Record Keeping Law: A Practical Guide for Businesses.”
Can I leave preparing an accounting book to your accounting office?
Basically, clients prepare primitive information, such as the electrical data of bankbooks and credit cards, and then our office prepares accounting books. We usually request that clients input essential data in Excel, such as receipts. If you request us to enter those data into books by hand, we request additional fees.
What is the corporate tax rate in Japan?
Japan’s effective corporate tax rate is generally around 30%, although the exact rate depends on factors such as taxable income, capital, and the location of your company. In addition to national corporate tax, companies are also subject to local corporate tax, corporate inhabitant tax, and corporate business tax.
For a detailed explanation of how these taxes are calculated, please read our blog, ” Japan Corporate Tax Rate Explained “
Is there VAT in Japan?
In Japan, VAT is called a consumption tax; the tax rate is 10%, except for food and drink. This Japanese consumption tax is very complex, which is the biggest cause of trouble between businesses and accounting offices. If you want to know more about it, please refer to the blog.
An Easy Explanation of Consumption Tax for Doing Business in Japan
How are tax audits positioned in Japan?
The Japanese income tax system, including corporation taxes, depends on taxpayers filing tax returns. Therefore, it is common that tax audits are conducted to confirm the correctness of tax filings except for one part of dishonest taxpayers. In a way, you should not worried about a tax audit so much in Japan. If you want to know more about Japanese tax audits, please refer to the blog.
I heard I can not change directors fees in the middle of the fiscal year in Japan. Is that correct?
You can change your directors’ fees. However, the changed portions are not considered expenses for tax purposes. If you want to know more about it, please refer to the blog.
When Launching a Company in Japan, Determining the Director’s Compensation Amount is Crucial
If I establish a company in Japan, when is the end month of the fiscal year?
In Japan, you can decide your company’s fiscal year-end month. For details, please see the blog.
When Establishing a Company in Japan, Which Month Should You Set as the Fiscal Year-End?
When selecting an accounting office in Japan, what should I consider?
You should select an accounting office that fits you and your business. Selecting a large accounting office may be better if your business is large. If it is rather small, a small accounting office may be fit for you. International taxation is not common for ordinary accounting offices. Also, the accounting office representative’s policy, personality, and thoughts are important. The offices that insist on only tax accuracy are not recommended because taxation is just part of management. While maintaining tax accuracy, our office advises you on several ways to choose for your business.
When foreign people run businesses in Japan, must they prepare accounting books in Japanese?
Yes. Preparing accounting books in Japanese is necessary because tax officers can properly conduct tax investigations.
If I leave the Japanese tax matter to you, will you do everything related to Japanese taxation?
Yes. Our office will handle almost everything related to Japanese taxation, such as submitting documents to a tax office or others, preparing an accounting book and tax returns, and doing tax planning, if you contract monthly advisory services with our office.
A Japanese tax office notified my company that they would conduct a tax audit. Can you measure against it and attend to it?
Yes. My office will hear about your company’s situation, and I will assist you if it is possible.
I am not sure I must file a tax return in Japan. If I consult with you about it, does it cost something?
It does not cost if the consulting takes around thirty minutes and the content is general.
I want to start a business in Japan while living outside Japan. Can you assist me?
Yes. I can assist you as a tax specialist. Besides, my office is a group member supporting foreign people and companies starting businesses in Japan. Therefore, I can introduce each specialist who is essential when starting a business in Japan.
Can you assist me in getting a Japanese management visa?
My accounting office can not assist you with it directly. However, we are a member of a group that assists foreign people or companies starting businesses in Japan and can, therefore, introduce you to a visa specialist.
Does your office assist me with past tax returns failing to file?
Yes. We hear your situation and assist with your past tax returns if needed.
Is incorporation neccessary when starting business in Japan?
You can start a business as a sole proprietor, but if you need a management visa, incorporation is a common option to obtain the visa smoothly. Therefore, when your spouse is Japanese, you can get a spouse visa, so there is no problem starting a business with a sole proprietor.
Can I file my tax return by myself in Japan?
Most Japanese sole proprietors whose businesses are not large, such as those with sales of a couple of million, file it themselves. On the other hand, most corporations leave it to a tax accountant because it is pretty complex.
Can I leave filing a tax return only one time to your office?
Yes. Our office accepts one-time transactions, such as individual tax returns for employees, the case they can be refunded their paid taxes.