Understanding Taxes When Starting a Business in Japan: Withholding Individual Income Taxes

【Koshida Accounting Firm Column Date:

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.


This blog may help if you are unclear about withholding individual income taxes.



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Businesses required to withhold

Both sole proprietors and corporations that employ staff must withhold taxes. Payments to a sole proprietor are not considered wages, so there’s no need to withhold. On the other hand, payments as officer compensation to a sole corporate president require withholding.


Individuals subject to withholding taxes

Those subject to withholding taxes include executives and employees receiving salaries, as well as certain professionals like tax accountants who receive fees.


Solo proprietors without employees

In cases where solo proprietors do not employ anyone and pay fees to professionals like tax accountants, there’s no need to withhold taxes.

For more information on paying withheld taxes, please refer to the blog below.

Understanding Japanese Taxes: Year-end Tax Adjustment



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.