What is included:
Cost: on request.
National Currency: Japanese Yen (JPY).
A company with a local registration or head office in Japan is considered a resident.
A resident company pays taxes on profits earned worldwide; a foreign one is usually taxed only on a certain income from a Japanese source.
However, if a foreign company has a permanent establishment in Japan, any income related to it is taxed in the same way as a subsidiary.
Taxable income is the difference between income and deductible expenses for the reporting period. Typically, transfers of certain assets between 100% subsidiaries are not considered deductible expenses.
The standard income tax rate of 23.2% applies to ordinary companies with registered capital in excess of 100 million JPY.
Companies must also pay tax to local residents, which depends on the location and size of the company, as well as local tax on enterprises, another tax levied by prefectures.
The effective tax rate for corporations (including taxes of local residents and enterprises), based on the maximum rates applied in Tokyo for a company whose registered capital exceeds 100 million yen, is approximately 30%. In other areas, the rate ranges from 30% to 34%.
The corporate tax rate for the branch is the same as for the subsidiary.
Japanese consumption tax, similar to European-style VAT, is levied on goods sold and services provided in Japan; selling or leasing certain assets in Japan; import of goods; and some digital services provided by non-residents in Japan.
The current combined national and local rate is 10% (8% for certain goods and services) for taxable transactions and 0% in certain cases (for example, export operations).
A reduced rate of 8% applies to food and beverages (excluding alcoholic beverages and food in catering establishments), and to some newspapers that are issued more than twice a week (by subscription).
Invoices are required corresponding to the rate of consumption tax. From October 1, 2023, an invoice similar to EU VAT will be required.
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