Public Procurement

Japan signed up to the World Trade Organisation Agreement on Public Procurement (GPA) in 1994, to create better opportunities for foreign companies in the signees’ respective countries.  Concretely this means that country who joined the GPA take measures to ensure fair and equal treatment of suppliers irrespective of whether they are a domestically based company or based in one of the other signees’ countries. 

The Japanese public procurement (PP) market is one of huge potential, with EU-estimates ranging from EUR 550 billion to EUR 565 billion. EU-companies are relatively underrepresented in the PP-market in Japan, partly due to non-regulatory barriers and the geographical distance and lack of knowledge of the market. EU companies that are presently active in this market are primarily larger global players, with a sizeable presence in Japan.

For foreign companies, the competent tax office is the location of the main permanent establishment in Japan.

The National Tax Agency , an external organ of the Ministry of Finance, is in charge of the assessment and collection of internal taxes. It supervises 12 Regional Taxation Bureaus throughout Japan, under which 524 local tax offices are set up to execute tax administration. (NTA)

Similar to many other countries, Japan charges penalties for any delay in the payment or the filing of the tax returns.

Japanese tax system offers a wide range of possibilities to pay taxes:

The annual filing of the corporate tax return has to be done within 2 months of the last day of the fiscal year at the taxation office where the company has its registered business address. The final financial figures with regard to the corporate earnings and the taxable amounts need to be correctly calculated and require the approval from the majority of the votes casted at the general meeting of the shareholders of the company.

Beside descriptions of the taxation system in Japan, the JTPP Helpdesk also strives to supply practical information to get your job done with regard to tax matters. For now, it is not yet possible to file tax returns etc. in other languages than in Japanese. However with the more practical guides JTPP Helpdesk aims to make the procedures more transparent and comprehensible for European SMEs.

Main points  

• Blue tax return forms give preferential tax treatments for fillers; 
• A registration in the local tax office is necessary; 
• The company must undertake a specific accounting procedure to be eligible. 

In Japan, Corporation tax is operated on the basis of a self-assessment system.

Further reading 

• Ministry of Finance Japan, Learning more About Taxes
• KPMG, Taxation in Japan (2024 Edition) 
• JETRO, Taxes in Japan

It is possible in Japan to complete the entire tax return filling and payment online. This solution may be very useful for a company headquartered abroad. There is however one important precondition to using online tax-services, which prevents foreign companies from using the online portals: 

Companies must have legal residence in Japan, which is necessary to obtain a digital ID/Electronic certificate.

e-Tax

www.e-tax.nta.go.jp