Japan has a reputation for complex bureaucracy, and its tax system lives up to that reputation. For entrepreneurs operating in Tokyo, understanding how taxes work — and finding a qualified accountant or tax advisor — is not a nice-to-have. It is a legal obligation. The good news is that Tokyo has a deep ecosystem of financial services professionals, many of whom specialize in working with foreign business owners and international companies.
Japan’s Corporate Tax Structure
Japan operates a multi-layer corporate tax system. The national corporate income tax rate is 23.2% for companies with paid-in capital exceeding 100 million yen. Smaller companies pay a reduced rate of 15% on the first 8 million yen of taxable income. On top of national tax, companies pay local corporate taxes, enterprise tax, and a special local corporate tax, which together bring the effective combined rate to roughly 29-34% depending on company size and location. Tokyo has some of the higher local tax rates in Japan due to its metropolitan government surcharges.
Consumption Tax (Shohi-zei)
Japan’s consumption tax — the equivalent of VAT or sales tax — currently stands at 10% for most goods and services, with a reduced rate of 8% applying to food and beverages consumed at home and certain newspaper subscriptions. Businesses with annual taxable sales exceeding 10 million yen are required to register as consumption tax payers and file quarterly or annual returns. New businesses under the threshold can elect to be exempt for up to two years, which is worth planning around when you structure your launch.
Starting in October 2023, Japan introduced the Qualified Invoice System (Invoice System), similar to Europe’s VAT invoicing requirements. Businesses that are consumption tax registered must issue qualified invoices with their registration number. If you are selling to other businesses, being registered is essential — your clients need your invoices to claim input tax credits.
The National Tax Agency (NTA)
All tax filings in Japan are administered through the National Tax Agency (NTA), accessible at nta.go.jp. The NTA provides English-language guidance for foreign taxpayers and maintains a network of regional tax offices throughout Tokyo. Blue Form Tax Return (aoiro shinkoku) status is highly recommended for small business owners — it unlocks deductions for depreciation, loss carryforward provisions, and other benefits not available under the standard white form.
Key Financial Filing Deadlines
Staying on top of deadlines is critical:
- Corporate income tax: Due within two months of fiscal year end (extensions available)
- Consumption tax: Annual returns due within two months of fiscal year end; interim payments required if prior year liability exceeded 480,000 yen
- Withholding tax: Monthly remittance to the NTA for salaries and certain payments to non-residents
- Social insurance: Monthly premiums for health insurance and pension deducted and remitted by the employer
Finding a Tax Accountant (Zeirishi) in Tokyo
A licensed Japanese tax accountant (zeirishi) is your primary point of contact for corporate tax compliance. Many zeirishi firms in Tokyo have English-speaking staff or international divisions specifically serving foreign companies. Firms such as Crowe Japan, Deloitte Tohmatsu, KPMG Tax Corporation, and PricewaterhouseCoopers Tax Japan serve multinational clients, while smaller boutique firms often provide more personalized service at lower cost for startups and small businesses.
Fees for bookkeeping and annual tax filing services for a small KK typically start around 200,000 yen per year and scale with transaction volume and complexity. Monthly bookkeeping retainers range from 30,000 to 100,000 yen depending on the firm and scope.
Payroll and Social Insurance
If you hire employees in Japan, you are required to enroll them in social insurance programs: health insurance (kenko hoken), employees’ pension insurance (kosei nenkin), employment insurance (koyo hoken), and workers’ accident insurance (rodo hoken). Employer contributions add roughly 15-16% on top of gross salary. Managing payroll in-house is possible but time-consuming. Many small businesses outsource payroll processing to their accounting firm or a specialist payroll provider.
Financial Services for Business Owners
Beyond tax compliance, Tokyo offers a full range of financial services for business owners:
- Business banking: MUFG, SMBC, Mizuho, and Japan Post Bank all serve corporate accounts (more on this in our banking guide)
- Foreign exchange: Competitive FX services from SBI Sumishin Net Bank, Sony Bank, and currency specialists like OFX and Wise for transferring money internationally
- Accounting software: freee and Moneyforward are the leading cloud accounting platforms in Japan, both with English support
- Financial planning: Tokyo has a growing number of IFAs (Independent Financial Advisors) serving expat business owners on personal wealth management
Tax Treaties and Foreign Income
Japan has tax treaties with more than 70 countries, reducing or eliminating double taxation on income earned across borders. If you are a foreign national operating in Tokyo, the treaty between Japan and your home country may affect how your business income, dividends, and royalties are taxed. A qualified international tax advisor can map out your exposure and structure your operations accordingly.
For a broader look at how business works in the city, read our guide to doing business in Tokyo. If you are still in the planning phase, our overview of best coworking spaces in Tokyo is a great place to figure out your physical setup before you start filing paperwork.
Get the Full Picture
Tax and financial planning in Tokyo is manageable with the right team around you. Join Hustlers Library free to access our growing library of guides for entrepreneurs operating in Japan and beyond.
Ready to Know Where You Stand?
The Business Journey dashboard maps your exact position across all 13 stages. Track your progress, unlock resources for each step, and build with a framework used by thousands of founders at Hustler's Library.
No credit card required · Takes 3 minutes · Personalized to your stage
