For corporate tax, corporations are divided into two categories: domestic corporations and foreign corporations. Domestic corporations are defined as all corporations that have their head offices in Japan. Also, subsidiaries of foreign corporations established in Japan are regarded as domestic corporations. Foreign corporations are those, which are not considered domestic, as well as branch offices or manufacturing plants set up in Japan by foreign corporations
[Japan Federation of Certified Public Tax Accountants' Associations, Guide to Japanese Taxes, 2018].
The tax base for determining corporate taxes stems from the income generated in the business year. The main types of corporate income tax in Japan are as follows:
- Corporation tax (national)
- Local corporate Tax
- Corporate inhabitant tax (prefectural)
- Corporate inhabitant tax (municipal)
- Enterprise tax (local)
- Special local corporate tax (national, but filings/payments are made to local governments with Enterprise tax)*
* JETRO, Taxes in Japan: Overview of Japanese Corporate Tax System for Investment in Japan
Effective Tax rates
On the basis of standard tax rates (Last update: May 2022)
|
|
Non-SMEs | ||
Business year base period |
Taxable income < 4 mln JPY |
Taxable income 4<>8 mln JPY |
Taxable income >8 mln JPY |
|
After April 1, 2021 to March 2025 |
21.37% |
21.37% |
33.58% |
29.94% |
April 1, 2025 |
25.84% |
27.55% |
33.58% |
29.74% |
Tax Burden on corporate income*
(April 2021-March 2025)
Taxable income |
< 4 mln JPY |
4<>8 mln JPY |
>8 mln JPY |
Corporate tax |
15.00% |
15.00% |
23.20% |
Local corporate tax |
1.55% |
1.55% |
2.39% |
Corporate Inhabitant taxes 1. Prefectural |
0.15% |
0.15% |
0.23% |
Corporate Inhabitant taxes 2. Municipal |
0.90% |
0.90% |
1.39% |
Enterprise tax |
3.50% |
5.30% |
7.00% |
Special local corporate tax |
1.30% |
1.96% |
2.59% |
Total tax rate |
22.40% |
24.86% |
36.80% |
*Based upon local rates applied in Tokyo as an example
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