Separately from the national corporate tax, companies registered in Japan are also subject to a local corporate residential tax payable to the local tax office where the company is registered as taxpayer. A combination of this tax and the municipal tax might result in a minimum of 2.6% up to a maximum tax burden of 4.41%, depending upon the final financial results, capital and total of employees hired by the company.

Source: Rob Van Nylen, Accounting and Taxes (EU-Japan Centre for Industrial Cooperation Report)

This is a local tax levied against profit after subtracting expenses (they will not be levied when loss is incurred) and through self-assessment. Corporate residential tax is levied on income as well as on a per capita basis with the corporation's capital and the number of its employees used as the tax base. Corporations who have more than 100 million yen of paid-in capital will be subject to enterprise tax on a pro forma basis.

Source: JETRO, Taxes in Japan: Overview of Corporate Income Taxes, 2013

 

Here is an example of corporate residential tax for Tokyo; the rates may vary between prefectures and municipalities.

Per Income

End-of-term capital, etc.

JPY10 million or less

Over JPY10 million and JPY100 million or less

Prefectural tax

Municipal tax

Prefectural tax

Municipal tax

Corporate tax

JPY10 million or less

5.0%

12.3%

5.0%

12.3%

Over JPY10 million

6.0%

14.7%

6.0%

14.7%

Per Capita Levy (Annual tax : JPY)

JPY 20,000

JPY 50,000

JPY 50,000

JPY 130,000

Source: MIPRO, Business Start-Up Guidebook for Foreign Residents in Japan, Tax Edition, 2011

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