Tax

Governments require a vast array of goods and services to perform their duties, which makes it difficult to give a specific indication for specific products. Foreign companies are currently primarily active in the following sectors (value-based), but still have relatively small shares:

Only a few comprehensive statistics are available on public procurement in Japan to obtain a good overview of how and where Japanese government institutions spend their money. Although various statistics can be found, they are difficult to compare, as different thresholds are often applied when compiling them. On this page you will find a selection of statistical resources regarding public procurement in Japan.

The framework of laws, ordinances and regulations governing government procurement in Japan is one of high complexity, involving dozens of legal texts. Procurement by national entities is subject to the Public Accounting Law. Public procurement by local government is governed by the Local Autonomy Law ^(J). This has resulted in the development of two separate legal structures for government procurement.

Japan signed up to the World Trade Organisation Agreement on Government Procurement (GPA) in 1994, in order to create better opportunities for foreign companies in the signatories’ respective countries. Concretely, this means that countries that 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 signatories’ countries.

The Japanese public procurement market holds huge potential, with EU estimates ranging from €550 billion to €565 billion. EU companies remain relatively underrepresented in this market, partly owing to non-regulatory barriers, geographical distance, and limited market knowledge. EU companies currently active in the sector tend to be larger global players with an established 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.