Tax and compliance for businesses in Japan

Snapshot

A company in Japan pays national corporate tax with local inhabitant and enterprise taxes, giving an effective rate of roughly 30 percent for many companies, and collects consumption tax at a standard 10 percent. The qualified invoice system has applied since October 2023, and registration for consumption tax generally follows taxable sales above 10 million yen.

Effective company tax: Roughly 30 percent for many companies, varies by size and location
Consumption tax: 10 percent standard, 8 percent reduced on certain items
Registration threshold: Generally taxable sales above 10 million yen in the base period
Qualified invoices: In force since October 2023, needed for full input tax credit

Fees and features as of 6 May 2026Last reviewed 6 May 2026

General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.

As of 6 May 2026, a company in Japan pays national corporate tax together with local corporate inhabitant tax and enterprise tax, which give an effective rate of roughly 30 percent for many companies, and it collects consumption tax at a standard rate of 10 percent, with 8 percent on certain items. A business generally registers for consumption tax once taxable sales in the base period exceed 10 million yen. The qualified invoice system, in force since October 2023, means a buyer usually needs a qualified invoice from a registered issuer to claim the full input tax credit, with a transitional 80 percent deduction until the end of September 2026. Confirm your specific position with a tax professional.

How business tax and compliance work in Japan

A company in Japan faces several layers of tax on its profit. National corporate tax sits alongside local corporate inhabitant tax and enterprise tax, and together these give an effective rate of roughly 30 percent for many companies, although the exact figure depends on company size, location, and income band. Separately, the company collects and remits consumption tax. As of 6 May 2026, confirm your specific rates with a tax professional and the National Tax Agency, since thresholds and local rates vary.

Consumption tax and the qualified invoice system

The standard consumption tax rate is 10 percent, with a reduced 8 percent rate on certain items such as most food and drink. A business generally becomes a taxable enterprise when its taxable sales in the base period exceed 10 million yen, though many smaller businesses register voluntarily. Since October 2023 the qualified invoice system has applied, so a buyer usually needs a qualified invoice from a registered issuer to claim the full input tax credit. A transitional measure allows 80 percent of the tax on purchases from non registered suppliers to be deducted until the end of September 2026, then 50 percent. As of 6 May 2026, confirm how this affects your invoicing.

Filing, books, and payroll obligations

A company normally files its corporate tax return within two months of the fiscal year end, with an extension available in some cases, and pays consumption tax on its own schedule. Many companies elect the blue return, which allows wider deductions in exchange for proper bookkeeping. Employers withhold income tax from salaries and handle social insurance, covering pension and health contributions. Keeping clear books and a clean audit trail through your business account makes all of this easier. As of 6 May 2026, confirm deadlines and elections with a tax professional.

How to stay on top of tax and compliance

Confirm whether you are a taxable enterprise for consumption tax and whether to register as a qualified invoice issuer.
Keep clean books, consider the blue return for wider deductions, and run business income and expenses through a dedicated account.
Track filing deadlines, withhold and remit payroll taxes and social insurance, and confirm rates and elections with a tax professional.

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Questions about tax and compliance in japan

What taxes does a company in Japan pay?

A company in Japan pays national corporate tax, local corporate inhabitant tax, and enterprise tax, which together give an effective rate of roughly 30 percent for many companies, plus consumption tax that it collects and remits. Rates vary with company size, location, and income. Confirm your position with a tax professional and the National Tax Agency, as of 6 May 2026.

What is the consumption tax rate in Japan?

The standard consumption tax rate is 10 percent, with a reduced rate of 8 percent on certain items such as most food and drink. Businesses generally collect consumption tax on sales and deduct it on purchases. Confirm the current rates and any reduced rate items, as of 6 May 2026.

When must a business register for consumption tax in Japan?

A business generally becomes a taxable enterprise for consumption tax when its taxable sales in the base period exceed 10 million yen, and many smaller businesses register voluntarily to issue qualified invoices. The qualified invoice system has been in force since October 2023. Confirm your obligation with a tax professional, as of 6 May 2026.

What is the qualified invoice system in Japan?

Under the qualified invoice system, in force since October 2023, a buyer generally needs a qualified invoice from a registered issuer to claim the full input tax credit for consumption tax. A transitional measure allows 80 percent of the tax on purchases from non registered suppliers to be deducted until the end of September 2026, then 50 percent. Confirm the rules with a tax professional, as of 6 May 2026.

Fees, features, and eligibility change and vary by region. This page was last reviewed on 6 May 2026. Confirm current terms with the provider before applying.

Tax and compliance in Japan