Tax in Japan

Who is the tax authority?

The National Tax Agency (NTA, 国税庁, Kokuzeicho) is the principal national tax authority, established in 1949 as an external organ of the Ministry of Finance. The NTA administers the Income Tax Act, the Corporation Tax Act, the Consumption Tax Act, and related statutes through twelve Regional Taxation Bureaus and roughly 524 Tax Offices nationwide. Local taxes — Juminzei (Inhabitants Tax), Enterprise Tax, and Fixed Assets Tax — are administered separately by prefectural and municipal offices.

Zeirishi (税理士), regulated under the Zeirishi Act 1951, hold the statutory monopoly on paid tax representation before Japanese tax authorities. Unauthorised paid representation carries criminal penalties — one of the strictest UPL regimes in Asia. The taxpayer-facing portal is nta.go.jp.

What is the tax year and when are returns due?

Japan's individual tax year is the calendar year (1 January – 31 December). The annual Kakutei Shinkoku (確定申告, Final Return) is filed between 16 February and 15 March of the following year. Salary-only employees whose employer completes the Nenmatsu Chosei (年末調整, Year-End Adjustment) typically do not file a Final Return.

Corporations file the Corporation Tax Return within two months of fiscal year-end (extendable to three months by election). Most large Japanese companies run an April-to-March fiscal year, meaning their returns are due by late May or June.

Who counts as a Japanese tax resident?

Japan's residency framework under the Income Tax Act has three tiers. A Permanent Resident has a domicile (jusho) in Japan or has had a continuous residence of one year or more, and meets the five-of-ten-years aggregate test — meaning a domicile or residence for more than five of the most recent ten years. A Non-Permanent Resident has a domicile or one-year-plus residence but has not yet met the five-of-ten-years rule. A Non-Resident is everyone else.

Permanent Residents are taxed on worldwide income. Non-Permanent Residents are taxed on Japanese-source income plus foreign-source income remitted to or paid in Japan. Non-Residents are taxed only on Japanese-source income, typically through a 20.42% withholding mechanism.

The five-of-ten-years test is the most distinctive feature of Japanese residency planning. Many foreign nationals hold Non-Permanent Resident status during their first years in Japan, which limits Japan's tax claim on non-remitted foreign-source income until the five-year threshold is crossed.

What are the personal income tax rates?

Japan uses seven national income tax brackets. All rates below are for 2024:

The FukkouTokubetsu Shotokuzei (Special Reconstruction Income Tax), a 2.1% surcharge on national income tax, runs from 2013 through 2037 to fund Tohoku post-disaster reconstruction. Local Juminzei (Inhabitants Tax) adds a flat 10% (4% prefectural + 6% municipal) on prior-year taxable income, assessed in the second calendar year of residency.

Deep-dive: see self-employed tax in Japan for how national, local, and social insurance charges stack for freelancers.

How does corporate tax work?

Japan's national Corporation Tax rate is 23.2% for fiscal years beginning on or after 1 April 2018. Local surcharges bring the combined effective rate to roughly 30% for large companies and 23–25% for SMEs that qualify for the reduced small-company rate on the first JPY 8 million of profit.

Japan implemented the OECD Pillar Two Income Inclusion Rule for fiscal years beginning on or after 1 April 2024, applying to groups with consolidated revenue above EUR 750 million. The Qualified Domestic Minimum Top-up Tax was added for years beginning on or after 1 April 2026. Companies can elect for consolidated taxation under the Group Tax Sharing system.

Deep-dive: see corporate tax in Japan for loss-carry rules and the Group Tax Sharing regime.

How does consumption tax work?

Shohizei (消費税, Consumption Tax) is Japan's VAT-style indirect tax. The standard rate is 10% and applies to most goods and services. A reduced rate of 8% applies to food and non-alcoholic beverages (excluding restaurant meals) and to subscription newspapers issued at least twice weekly.

The Tekikaku Seikyusho Seido (Qualified Invoice System) took full effect from 1 October 2023, requiring registered Qualified Invoice Issuer numbers on invoices to support input-tax credits. Mandatory Consumption Tax registration applies once taxable sales in the base period (two fiscal years prior) exceed JPY 10 million. Businesses below the threshold are exempt by default but may elect to register voluntarily.

Deep-dive: see consumption tax in Japan for the invoice system compliance details.

How are cryptoassets taxed?

The NTA classifies cryptoassets as zatsushotoku (miscellaneous income) for most individual filers — taxed at progressive national income tax rates rather than the separate-taxation regime that applies to listed securities. The consequence is that crypto gains can be taxed at a combined top rate of approximately 55% (45% national + 10% Juminzei + 2.1% reconstruction surtax applied to national tax).

Deep-dive: see crypto taxation in Japan for the NTA's classification methodology and reform timeline.

What is the treaty network?

Japan maintains roughly 85 comprehensive Double Taxation Conventions, plus the Convention on Mutual Administrative Assistance in Tax Matters and an extensive set of Tax Information Exchange Agreements. Most Japanese treaties follow the OECD Model with Japan-specific reservations and Limitation on Benefits provisions in newer agreements. Japan signed the OECD MLI and selected the Principal Purpose Test; MLI modifications apply to many treaties from 2019 onward.

Foreign tax credit relief is claimed under Article 95 of the Income Tax Act for individuals and Article 69 of the Corporation Tax Act for corporations. Japan's treaty network is among the densest in Asia — a material advantage for inbound investors and multinationals.

Deep-dive: see tax treaty relief in Japan for the bilateral withholding-rate schedules.

Where does Japan sit in the East Asian cohort?

Japan anchors the East Asia developed-economy major archetype alongside South Korea and Taiwan. The broader East and Southeast Asian region splits into five distinct tax archetypes:

Common pitfalls when operating in Japan

Foreign individuals and companies consistently trip on a set of recurring traps in the Japanese system:

When should you talk to a Japanese tax pro?

Some situations are straightforward enough to handle through NTA's e-Tax portal or a salary-only Year-End Adjustment. Others need a zeirishi early:

• Your income crosses the 33% or higher bracket, or you have multiple income sources
• You are a Non-Permanent Resident approaching the five-of-ten-years transition
• You hold cryptoassets with realised gains and need the miscellaneous-income stacking effect modelled
• You run a small business and need to elect the Blue Tax Return (Aoshinkoku) before the March deadline
• You have Furusato Nozei donations you want to optimize within your cap
• You operate a corporation and need to navigate Pillar Two, the Group Tax Sharing regime, or Qualified Invoice compliance
• You received an NTA notice of assessment, audit inquiry, or delinquent-tax notice
• You are moving to or from Japan and need to plan the Non-Permanent to Permanent Resident residency-status transition

You can find vetted Japan-based zeirishi and bilingual tax practitioners through the directory below.

This page is general information. It is not personal guidance for your specific situation. Tax rules change. Always check current figures on the NTA website (nta.go.jp) or with a licensed Japan-based zeirishi before filing.