Japanese Business Glossary

納税 (nozei) means "tax payment" in Japanese. It refers to the act of paying taxes to the government. In Japan, businesses and individuals are required to pay various types of taxes, including income tax, corporate tax, consumption tax, and others.

For businesses, understanding and complying with tax obligations is essential. Taxes must be filed and paid within specified deadlines to avoid penalties. It is important to maintain accurate financial records and stay informed about the current tax laws and rates.

Tax payments are a crucial aspect of running a business in Japan, ensuring that the business operates legally and contributes to the nation's economy.

扶養親族 (fuyou shinzoku), dependents or dependent family members, refers to dependents in the context of Japanese taxation and social security. These are typically family members whom a taxpayer supports financially, and for whom the taxpayer can receive certain tax benefits.

Dependents can include children, spouses, parents, and sometimes other relatives who meet specific criteria. The criteria include factors such as age, income level, and relationship to the taxpayer. By claiming dependents, taxpayers can reduce their taxable income, which in turn lowers their overall tax burden.

仕入税額控除 (shiiresu zeigaku kojo) refers to the input tax credit deduction under Japan's consumption tax framework. This mechanism allows businesses to offset the consumption tax they owe on their sales by the amount of consumption tax they have already paid on their purchases. This helps prevent double taxation and ensures that the tax is ultimately borne by the final consumer.

For instance, if a business has a consumption tax liability of ¥1,000,000 from its sales but has already paid ¥800,000 in consumption tax on its purchases, it only needs to remit the net amount of ¥200,000 to the tax authorities.

The recent introduction of the Invoice System (適格請求書等保存方式 or "qualified invoice system") on October 1, 2023, has brought significant changes to this process. Under this system, businesses must use qualified invoices to claim input tax credits. Qualified invoices must include specific details such as the seller’s registration number, applicable tax rate, and tax amount for each rate.

Additionally, there are transitional measures in place to ease the burden on businesses. From October 1, 2023, to September 30, 2026, businesses can claim 80% of the input tax credit on purchases from non-registered suppliers. This percentage will drop to 50% from October 1, 2026, to September 30, 2029​.

Understanding and complying with these regulations is crucial for businesses to optimize their tax liabilities and ensure they are not overpaying.

減価償却費 (genkashoukyakuhi) means depreciation expense in Japanese.

Depreciation expense is the accounting process of allocating the cost of tangible assets over their useful lives. This method recognizes that assets like machinery, vehicles, and buildings lose value over time due to wear and tear, usage, or obsolescence.

In Japan, depreciation expense is a significant component of financial statements, helping businesses reflect the declining value of their fixed assets accurately. The amount and method of depreciation can affect a company's taxable income, making it crucial for tax reporting and financial planning.

The two common methods of depreciation in Japan are the straight-line method, where the asset's cost is spread evenly over its useful life, and the declining balance method, where higher depreciation expenses are recorded in the earlier years of the asset's life, decreasing over time.

Understanding and correctly applying depreciation expense is essential for accurate financial reporting and tax compliance in Japan.

免税 (menzei), tax exemption or duty-free, refers to the practice of exempting certain goods or services from taxes, commonly used in the context of shopping for international travelers or specific business transactions that qualify for tax relief.

In Japan, tax exemptions are often seen in duty-free shops, where tourists can purchase items without paying the consumption tax. Additionally, businesses might be eligible for tax exemptions under certain conditions, such as specific industries or transactions that meet government criteria.

Understanding tax exemptions can be crucial for businesses operating in Japan, as it can impact pricing, profitability, and compliance with local tax laws.

税金 (zeikin) is the Japanese word for tax.

In Japan, taxes are mandatory financial charges imposed by the government on individuals and businesses. They are used to fund public services and infrastructure. There are various types of taxes in Japan, including income tax, corporate tax, consumption tax, and property tax.

Income tax is levied on the earnings of individuals. Corporate tax is applied to the profits of companies. Consumption tax is similar to VAT or sales tax and is added to most goods and services. Property tax is charged on real estate holdings.

Understanding and complying with tax obligations is crucial for both individuals and businesses operating in Japan.