Corporate Tax in Japan: Rates, Deadlines, and Filing Requirements

Japan imposes corporate income tax on both domestic and foreign corporations with taxable activities in the country.

The effective tax rate typically ranges from 30% to 35%, combining national corporate tax with local prefectural and municipal taxes.

This guide explains how the system works, how tax is calculated, who must file, and what foreign corporations need to know before operating in Japan.

Note: This article is intended to provide general information only and should not be relied upon as legal or tax advice.

Quick summary: What is corporate tax in Japan?

Corporate tax in Japan is not a single tax. It is a combined obligation made up of three separate levies:

• National corporate tax: imposed by the central government

• Local corporate inhabitant tax: imposed by the prefecture and municipality where the company is registered

• Local enterprise tax: a prefectural tax based on business activity

The effective corporate tax rate for most companies in Japan is 30%–35% of taxable income.

This applies to both Japanese corporations and foreign companies with taxable business activities in Japan. Returns are filed annually with the National Tax Agency, typically within two months of the company's fiscal year end.

Important for foreign companies: Even when filing electronically, tax payment slips, assessment notices, and official correspondence are still sent by post to the company's registered address in Japan. Missed mail means missed deadlines — and automatic penalties.

How Japanese law classifies corporations for corporate tax purposes

Under Japanese corporate tax law, companies are classified into two main categories for corporate income tax purposes: resident (domestic) corporations and non-resident (foreign) corporations.

This legal classification determines which income is taxable in Japan and how corporate tax is assessed.

Resident (domestic) corporations

A resident corporation is a company that is incorporated in Japan.

Resident corporations are subject to Japanese corporate tax on their worldwide income, regardless of where the income is generated.

This means that income such as

• overseas business profits,

• cross-border service income, and

• royalties or licensing income from abroad

may all fall within the Japanese corporate tax base.

Non-resident (foreign) corporations

A non-resident corporation is a company that is incorporated outside Japan.

A foreign corporation is subject to Japanese corporate tax only on income attributable to Japan, and typically only where the foreign company has a permanent establishment (PE) in Japan.

In practice, this means that Japan taxes only the portion of profit that is economically connected to the foreign company’s activities carried out in Japan.

Role of tax treaties

Japan maintains an extensive network of income tax treaties designed to avoid international double taxation and to allocate taxing rights between Japan and the other contracting state.

In most cross-border situations, treaty provisions override domestic rules when determining:

• whether a permanent establishment exists in Japan, and

• how much profit may be attributed to that permanent establishment.

However, treaty benefits are not applied automatically. Corporations must generally submit the required treaty-related documentation to the Japanese tax authorities or to the payer of income in Japan.

Tax administration

Corporate income tax in Japan is administered by the National Tax Agency, together with its regional and local tax offices.

The National Tax Agency is responsible for:

• accepting corporate tax returns,

• reviewing filings,

• issuing assessments and correction notices, and

• conducting tax reviews and audits.

Corporate tax vs. consumption tax in Japan

Many people confuse corporate tax with Japan’s consumption tax (often referred to as JCT).

Corporate tax is a profit-based tax. It is calculated on a company’s taxable income for each business year and is filed with the National Tax Agency together with local tax offices.

Consumption tax, by contrast, is a transaction tax similar to VAT or GST. It is charged on sales of goods and services in Japan and is completely separate from corporate income taxation.

A company can therefore:

• have no corporate tax payable because it is loss-making, but still

• have consumption tax filing obligations if it makes taxable supplies in Japan.

Corporate tax focuses on where profits are attributable, while consumption tax focuses on where transactions occur and who is responsible for collecting and remitting the tax.

👉 Go to our Japanese business glossary to learn more about the various tax types in Japan.

Who must pay corporate income tax?

In Japan, corporate tax applies to both domestic and foreign corporations when they earn taxable income connected to Japan.

The key point for overseas founders and finance teams is that tax liability is based on legal structure and business presence—not on nationality or ownership.

Here is a breakdown of who exactly needs to pay.

Japanese corporations

Upon incorporation in Japan, your company is required to file and pay corporate income taxes.

This includes Kabushiki Kaisha (KK) and Godo Kaisha (GK).

These domestic corporations are treated as Japanese resident corporations and are generally taxed on their worldwide income, not only income generated in Japan.

In practice, this means that overseas revenue, cross-border service income, licensing income, and group transactions may all be included in the Japanese corporate tax calculation.

Foreign companies operating in Japan

If a foreign corporation establishes a permanent establishment (PE) in Japan, it is required to pay corporate tax. When a permanent establishment exists, Japan can tax the portion of profit attributable to the Japanese activities.

In these cases, the foreign head office still exists outside Japan, but the Japanese operations are treated as a taxable unit for corporate tax purposes.

Typical examples include:

• a registered branch office in Japan

• a physical office or coworking space used continuously

• employees working in Japan

• a representative or agent who regularly concludes or negotiates contracts in Japan

Branch offices and wholly owned subsidiaries: How tax treatment differs

Foreign companies entering Japan typically do so through either a branch office or a wholly owned subsidiary, and the distinction matters for corporate tax purposes.

A branch office is not a separate legal entity. It is an extension of the foreign parent company.

Corporate tax applies only to income attributable to the Japanese branch operations, meaning profit generated outside Japan remains outside the Japanese tax base.

A wholly owned subsidiary, by contrast, is incorporated in Japan and treated as a domestic corporation.

This means it is subject to Japanese corporate tax on its worldwide income, not just income generated in Japan.

For most foreign businesses, the choice between a branch and a subsidiary has significant implications for how corporate tax liability is calculated, how transfer pricing rules apply to intercompany transactions, and how dividend income is treated when profits are repatriated to the parent company.

What is included in Japan's corporate income taxes?

Corporate income taxes usually refer to a bundle of different taxes that are calculated together and paid as part of a company's overall corporate tax compliance.

In practice, this bundle consists of:

• national corporate tax

• local corporate inhabitant tax

• enterprise tax

Although these three taxes are often discussed together as “corporate tax," they are:

• calculated separately,

• administered by different authorities, and

• communicated through different official letters and payment slips.

This means that overseas directors and finance teams cannot handle corporate tax compliance in Japan through a single channel. Even if you file and pay the national corporate tax correctly, a single missed local tax notice can still lead to late payment penalties.

National corporate tax

This is the main profit-based corporate tax imposed by the Japanese central government.

It is calculated based on your company’s taxable income after allowable deductions, adjustments, and loss carryforwards.

National corporate tax is administered by the National Tax Agency.

They are in charge of:

• receiving your corporate tax return

• reviewing your documents

• issuing assessments, correction notices and audit-related correspondence

• sending official payment slips and notices by post

For overseas companies, this is usually the first authority that contacts the company when questions arise about taxable presence or profit attribution.

Local corporate tax

Local corporate inhabitant tax is a local tax imposed by the municipality (city or ward) and the prefecture where your domestic corporation is registered or has business operations.

This tax is calculated using:

• your company’s income (linked to the national tax calculation), and

• in many cases, a per capita component based on company size and capital.

Even if your business is not profitable, you may still be required to pay a minimum local inhabitant tax depending on your structure and registration.

This part of the “corporate tax” bundle is administered by local government tax offices, not the national authority.

Enterprise tax

Enterprise tax is another local tax that applies to companies conducting business activities in Japan.

It is generally imposed by the prefecture and is based on:

• taxable income, or

• in certain cases, alternative tax bases (depending on the company’s size and industry).

For companies with operations in multiple prefectures, enterprise tax may need to be allocated between different prefectures.

This tax is administered by the prefectural tax office, and payment notices are issued separately from national corporate tax.

👉 Julia Rivera of Otani Accounting Offices covers other tax considerations in “6 Essential Points Startups Should Know About Japan's Tax Regulations.”

Current corporate tax rates in Japan

When people refer to “corporate tax in Japan," they are usually referring to the combined burden of:

• national corporate tax, and

• several local taxes that are calculated in parallel.

For clarity, the structure is as follows.

1. National corporate tax (central government)

Company category	Taxable income band	National corporate tax rate
Large companies (paid-in capital over JPY 100 million)	All taxable income	23.2%
Small and medium-sized companies (capital JPY 100 million or less)	First JPY 8 million of taxable income	15%
Small and medium-sized companies (capital JPY 100 million or less)	Taxable income exceeding JPY 8 million	23.2%

Note: Certain SMEs are subject to restrictions on the reduced rate depending on ownership structure and group relationships.

2. Local corporate taxes (prefectural and municipal)

In addition to national corporate tax, companies must pay the following local taxes:

• corporate inhabitant tax (prefectural and municipal portions), and

• enterprise tax (prefectural tax).

These taxes are calculated using statutory formulas that are linked to:

• the company’s taxable income, and

• the national corporate tax amount.

In addition, a fixed per capita tax may apply based on capital and number of employees.

Local tax rates and formulas vary by prefecture and municipality.

3. Typical effective corporate tax rate

Because local taxes are added on top of the national corporate tax, the total effective corporate tax burden for a standard company is typically 30% to 35% of taxable income.

As a practical guideline:

• companies with smaller capital and simpler structures tend to fall closer to the lower end of the range, while

• companies with larger capital, higher per-capita local tax, and full local tax exposure tend to fall closer to the upper end.

4. Key thresholds that affect corporate tax treatment

The following thresholds are particularly important when determining applicable rates and formulas:

• Paid-in capital of JPY 100 million → determines whether a company is treated as an SME for national corporate tax rate purposes.

• Location of registered office and business operations → determines the applicable prefectural and municipal local tax formulas.

These thresholds directly influence both national rate eligibility and local tax calculations.

How corporate tax is calculated

Japan’s corporate tax is calculated by starting with your company’s accounting profit and then adjusting it under Japanese tax rules.

In practice, the process looks like this.

1. Taxable income

Your taxable income is not the same as your financial statement profit.

It is calculated as:

Accounting profit ＋ taxable add-backs − tax-deductible items

Typical adjustments include:

• expenses that are not fully deductible for tax purposes

• timing differences between accounting and tax treatment

• special deductions or incentives (if applicable)

In simple terms, taxable income is your profit after applying Japan’s tax-specific rules.

2. Deductible expenses

As a general rule, an expense is deductible if it is:

• directly related to your business activities, and

• properly recorded and supported by documentation.

Common deductible expenses include:

• salaries and bonuses

• office rent and utilities

• professional fees (accounting, legal, consulting)

• marketing and advertising

• travel and business-related entertainment (subject to limits and conditions)

However, some costs are fully non-deductible, partially deductible, or only deductible if specific documentation or approval requirements are met.

This is one of the most common areas where adjustments are made during tax reviews.

3. Depreciation

Assets such as equipment, furniture, computers, and machinery cannot usually be expensed in full in the year of purchase.

Instead, they are depreciated over a statutory useful life under Japanese tax rules.

In practice:

• the useful life is prescribed by regulation, not freely chosen by the company

• the depreciation method is generally fixed (for most assets, straight-line is now standard)

If your accounting depreciation differs from the tax-allowed depreciation, the difference must be adjusted when calculating taxable income.

4. Loss carryforwards

If your company records a tax loss in a fiscal year, that loss can usually be carried forward for up to 10 years and used to offset future taxable profits.

However, important limitations apply:

• large companies are generally subject to a restriction on how much profit can be offset by prior losses in a given year

• smaller companies may be able to offset a larger portion of their profits, depending on their capital structure and ownership

This means that even if your domestic corporation has past losses, it may still be required to pay corporate tax in a profitable year.

5. Related-party transactions

If your company conducts transactions with related parties, such as:

• a foreign parent company

• a group company overseas

• another Japanese group company

the prices and fees charged must follow Japan’s transfer pricing rules.

This typically affects:

• management fees

• service fees

• royalties

• intercompany cost allocations

The tax authorities may review whether the amounts paid or received are consistent with what independent companies would agree to under similar circumstances.

For overseas companies and remote teams, it is important to note that questions and reviews about how taxable income is calculated are normally communicated through formal written notices sent by post.

6. Blue return status

Companies in Japan can apply to file under a blue return designation (青色申告), which unlocks several tax advantages not available to standard filers.

The most significant benefit for most businesses is the ability to carry forward tax losses for up to 10 years and offset them against future taxable profits.

Blue return filers may also access certain accelerated depreciation treatments and special deductions depending on company size and structure.

To qualify, a company must apply in advance with the National Tax Agency and maintain accounting records that meet the required standard.

For foreign-owned businesses filing corporate tax in Japan for the first time, applying for blue return status early is worth discussing with a licensed Japanese tax accountant, as losing access to loss carryforward benefits in the early years of a business can meaningfully increase corporate tax liability over time.

Example: how much corporate tax is paid in practice

The simplified example below illustrates how corporate tax is typically calculated for a standard company.

Assumptions

• Taxable income for the business year: JPY 50,000,000

• Company is not eligible for special incentives

• One operating location in a single prefecture

• Standard (non-SME preferential band) rates apply

Step 1 – National corporate tax

• JPY 50,000,000 × 23.2% = JPY 11,600,000

Step 2 – Local taxes calculated based on the national tax and income

In addition to national corporate tax, the company must pay:

• local inhabitant tax (prefectural and municipal portions), and

• enterprise tax (prefectural tax).

These local taxes are calculated using statutory formulas that reference:

• the company’s taxable income, and

• the national corporate tax amount.

In a typical case, these local taxes combined are broadly equivalent to an additional 6%–12% of taxable income, depending on the company’s size and location.

Illustrative total

• National corporate tax: approx. JPY 11.6 million

• Local inhabitant tax and enterprise tax (combined): approx. JPY 4.0–6.0 million

Approximate total corporate tax burden

→ JPY 15.6–17.6 million

This corresponds to an effective corporate tax rate of approximately 31%–35%.

Note: This example is illustrative only. The actual effective rate depends on factors such as capital size, applicable SME rules, per-capita local tax, and prefectural and municipal tax formulas.

👉 See the National Tax Agency guidelines for more information regarding corporate tax.

When are corporate tax filing deadlines in Japan?

Japan applies strict, calendar-based deadlines and does not relax them simply because a company is managed from abroad. In Japan, a corporate tax return must generally be filed within two months after the end of the company's fiscal year.

For a standard company with a December 31st year-end, the final tax return for the applicable fiscal year and payment are due by February 28th.

This rule applies equally to:

• Japanese corporations, and

• foreign corporations that are required to file corporate tax in Japan.

Extension possibilities

A company may apply in advance for a filing deadline extension if it has valid administrative or operational reasons (for example, consolidated group reporting or delays in finalizing accounts).

However, the extension applies to the filing deadline only. It does not automatically extend the tax payment deadline.

This means that any tax due is still expected to be paid by the original deadline, unless a separate payment deferral arrangement is approved under limited circumstances.

Why foreign corporations miss deadlines

In practice, foreign-managed businesses most often miss Japanese corporate tax deadlines for operational—not legal—reasons.

Physical delivery of notices

Although filing may be done electronically, many important documents—such as:

• filing instructions,

• payment slips,

• assessment notices, and

• requests for clarification

are still delivered by physical mail to the company’s registered address in Japan.

If this mail is not actively monitored, overseas directors may not become aware of upcoming deadlines or required follow-up actions until it is already too late.

Language barriers

Official tax correspondence is normally issued in Japanese.

Overseas teams often delay opening, translating, or escalating tax mail because:

• the content is not immediately understood, and

• the urgency of the request is unclear without specialist knowledge.

This delay alone can cause businesses to miss short response and payment windows.

Lack of local staff or representatives

Many foreign companies operating in Japan have no full-time local staff or rely entirely on overseas management.

When there is no one on the ground to receive mail, contact the tax office, or coordinate quickly with a tax accountant, even small procedural requests can lead to missed statutory deadlines.

How are corporate tax returns filed in Japan?

Corporate tax returns in Japan are normally filed either through a licensed tax accountant or directly by the company using the official electronic filing system operated by the National Tax Agency.

For foreign-owned businesses and overseas management teams, the process is usually handled as follows.

1. Licensed tax accountant

Most companies file their corporate tax returns through a licensed Japanese tax accountant.

The accountant:

• prepares the national corporate tax return and all local tax returns

• calculates taxable income and tax liabilities

• prepares electronic submission data

• submits the filings on behalf of the company

From an operational point of view, this is the standard approach for companies without Japanese-speaking finance staff, overseas headquarters managing compliance remotely, and businesses with cross-border transactions or group structures.

Even when a tax accountant files for you, the company itself remains legally responsible for the accuracy of the return.

1.1 Tax agent

Foreign companies operating in Japan without a local presence sometimes appoint a tax agent rather than a licensed tax accountant.

A tax agent is an individual or entity designated to receive official correspondence from the National Tax Agency on behalf of the company, including payment slips, assessment notices, and audit-related letters.

This is different from a tax accountant, who actively prepares and submits returns on the company's behalf.

Appointing a tax agent does not fulfill the company's filing obligations on its own.

For most foreign corporations subject to Japanese corporate tax, a licensed tax accountant remains the practical requirement, with a tax agent serving as an additional safeguard for managing official mail and ensuring nothing is missed between filing cycles.

2. Electronic submission

The final return form for corporate tax returns can be sent electronically using the official online filing system provided by the tax authorities.

Electronic filing is commonly used for:

• national corporate tax returns

• consumption tax returns

• various attachments and schedules

Many companies use electronic filing indirectly through their tax accountant, rather than operating the system internally.

It is important to understand that electronic filing covers the submission of the tax return itself. It does not eliminate the physical correspondence after filing.

Submission of supporting documents

A corporate tax return is not only the main tax form.

It is accompanied by multiple supporting schedules and statements, such as:

• financial statements

• detailed profit and loss schedules

• fixed asset and depreciation schedules

• loss carryforward schedules

• shareholder and capital information

• related-party transaction disclosures (where applicable)

Most of these documents are submitted electronically together with the tax return. However, it's important to keep in mind that additional documents may be requested later, and clarification requests are often issued after the initial filing.

These requests are normally sent as formal written notices.

👉 See also "How to Get Your Business Manager Visa in Japan.”

Official documents and mail related to corporate income taxes

After your company files its corporate tax return, and throughout the life of your business in Japan, you will receive several official and legally binding documents by post from the tax office. These documents are issued and administered by the National Tax Agency and its local tax offices.

Although some filing and payment processes are available online, almost all legally binding corporate tax communication in Japan is still delivered by post.

This includes:

• payment slips

• assessment notices

• correction notices

• audit and investigation letters

Below, we break down the documents you can expect to receive related to your corporate tax.

1. Tax payment slips

Tax payment slips are issued when corporate tax (and related local taxes) must be paid.

They show:

• the tax type

• the payment amount

• the due date

• the payment reference information

These slips are used to make payment at banks, convenience stores, or through approved electronic payment methods.

If you do not receive or notice the payment slip in time, the payment deadline does not change, even if your company is overseas.

2. Assessment notices

Assessment notices are formal documents issued by the tax office to confirm or determine your tax liability.

They are typically sent when:

• the tax office reviews your filed return, or

• the tax office determines that a different tax rate applies.

An assessment notice is legally binding and normally starts the countdown for payment deadlines and the period during which you may file an objection or request a review.

3. Correction notices

Correction notices are issued when the tax office adjusts or corrects a previously filed return.

This usually happens when:

• additional information is provided,

• calculation errors are identified, or

• certain expenses or income treatments are not accepted.

A correction notice will clearly state what was changed, the revised taxable income or tax rate, and whether additional tax must be paid.

These notices often come with very short response or payment deadlines.

4. Audit-related correspondence

If your company is selected for a tax review or audit, you will receive formal written correspondence, such as:

• requests for accounting records

• requests for contracts and invoices

• explanations of transaction structures

• notices of audit visits or interviews

For foreign businesses, audit letters frequently focus on cross-border transactions, intercompany service fees and royalties, and profit allocation to Japanese activities.

These requests are always issued in writing and must be handled carefully and within the stated deadlines.

What happens if you miss corporate tax notices or payments in Japan?

Missing a corporate tax notice or failing to pay by the due date is treated as a compliance issue, even if the delay is unintentional. The consequences are enforced by the National Tax Agency and, where relevant, by local tax offices.

Below is what typically happens.

Late payment penalties

If you do not pay corporate tax by the stated deadline, a statutory late payment penalty is imposed.

This applies even when:

• the return was filed correctly, but

• the payment itself was late.

The penalty is calculated automatically based on the length of the delay.

Interest on unpaid tax

In addition to penalties, interest is charged on the unpaid amount from the day after the payment deadline until the tax is fully paid.

This means that the longer the delay continues, the higher the total amount you must ultimately pay.

Forced collection procedures

If payment is not made after reminders and formal notices, the tax office can begin forced collection procedures.

This can include:

• seizure of bank accounts,

• seizure of receivables from customers,

• seizure of other company assets.

Importantly, forced collection can proceed without a court process once the statutory collection steps have been completed.

Increased audit and review risk

Companies that repeatedly miss payment deadlines or fail to respond to official notices are more likely to be flagged for tax reviews, document requests, or formal tax audits.

This does not only affect the year of the missed payment. It can increase scrutiny over:

• expense deductibility,

• related-party transactions,

• and profit allocation to Japan in later years.

MailMate supports overseas companies managing corporate tax in Japan

MailMate is your secure virtual mailbox in Japan—built for overseas founders and finance teams who cannot afford to miss tax mail, payment deadlines, or government notices.

Never miss a tax notice again

MailMate receives your Japanese bills, tax notifications, and official government correspondence on your behalf and instantly scans them into your private online dashboard. You can review everything from anywhere in the world without waiting for international mail.

Manage Japanese tax mail from abroad

All physical Japanese mail, such as refund notices and tax office letters, is digitized and available online, so your team can act immediately, even if you are outside Japan.

Need the original document?

Simply request international forwarding inside your dashboard. MailMate ships it to your chosen address and provides a tracking number.

Built for tax and audit compliance

MailMate supports compliance with Japan’s Electronic Bookkeeping Act by ensuring that:

• tax documents (receipts, invoices, and purchase records) are stored in a tamper-resistant format

• files can be searched by date, document type, and keywords

• records are preserved with time-stamped verification

This makes it easy to retrieve documents during audits, filings, or internal reviews.

Pay taxes and bills on time—every time

The moment your mail arrives, you receive a real-time notification. Each scanned document is clearly labeled with its due date and payment or response requirements, so nothing slips through the cracks.

MailMate turns slow, paper-based Japanese tax mail into a fast, trackable, and compliant digital workflow—so you stay in control, even when your business is managed from overseas.

Frequently asked questions

What is the corporate tax rate in Japan?

Japan's effective corporate tax rate is typically between 30% and 35% for most companies. This combines the national corporate tax rate of 23.2% with local inhabitant tax and enterprise tax. Small and medium-sized companies with paid-in capital of JPY 100 million or less may benefit from a reduced rate of 15% on the first JPY 8 million of taxable income.

When is the corporate tax filing deadline in Japan?

Corporate tax returns must be filed within two months of the end of your company's fiscal year. For a company with a December 31st year-end, the deadline is February 28th. Extensions can be applied for in advance, but they apply to the filing deadline only—tax payment is still due by the original date.

What happens if I miss a corporate tax deadline in Japan?

Late payment triggers automatic penalties and interest that accumulate daily until the tax is paid. If payment remains outstanding after formal notices, the tax office can seize bank accounts or company assets without a court process. Missing deadlines also increases the likelihood of a tax audit.

Do I need a Japanese tax accountant to file corporate tax?

You are not legally required to use a tax accountant, but most foreign-owned businesses do. Filing corporate tax in Japan involves multiple national and local returns, Japanese-language documentation, and coordination with different tax offices. A licensed Japanese tax accountant handles all of this on your behalf, though the company remains legally responsible for the accuracy of the return.

Does Japan tax foreign companies on worldwide income?

No. Foreign corporations are only taxed on income attributable to Japan—typically income connected to a permanent establishment such as a branch office or fixed place of business. Japanese corporations, by contrast, are taxed on their worldwide income regardless of where it is generated.

In closing

Corporate tax in Japan is manageable if you're prepared. The rules are clear, deadlines are predictable, and the process is well-documented.

Work with a licensed Japanese tax accountant, keep your registered address actively monitored, and maintain clean documentation for any cross-border transactions.

Japan's tax authorities are consistent and process-driven. Companies that match that consistency rarely run into serious problems. Those that don't tend to find out quickly that late payment penalties move just as efficiently as the rest of the system.