Unique Tax Rules in Japan That Surprise Foreign Entrepreneurs

Hello, my name is Taisei Koshida, and I am a certified public accountant and tax accountant.

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

When starting a business in Japan, you might be surprised at some unique Japanese tax systems compared to other countries’ systems.

1. Withholding Tax for Directors’ Fees

In Japan, even directors’ fees are the scope of withholding tax.

2. Fixed Director’s Fees

Basically, a company can not pay bonuses to directors for tax purposes, even if the company’s profit grows unexpectedly in the middle of the fiscal year. It is concidered non-expenses for tax purposes in Japan.

3. Tolerant for Entertainment Expenses

A broad range of entertainment expenditures are considered expenses for tax purposes in Japan, such as fees for golf play as far as there are facts to entertainment. However, the limit is 8 million yen for small businesses. On the other hand, for large companies, half of all expenditures are considered expenses.

4. The Year-End Tax Adjustment

In Japan, businesses must calculate employees’ income taxes and collect and pay taxes from the end of the year to January.

5. Exemption from VAT, Japanese Consumption Tax

Roughly saying, small Japanese businesses whose sales are under 10 million yen are exempted from consumption tax. However, even if they invest a lot of money, they can not get a refund without a particular application in advance.

Our accounting and tax office has been actively assisting foreign business owners in Japan with accounting and tax matters. Also, not only in the tax and accounting field, our office can support your business in Japan in the fields of visa, registration, social insurance, and law by networking with specialists. Plus, we have networked with specialists in web marketing, building websites, and business consulting suitable for Japanese customers. All services are provided in English. Please feel free to reach out to us through the inquiry form.