Taxes and Accounting in Japan

Overview by Globlatrade.net:

Accounting Rules

Tax Year
From January 1st to December 31st.
Accounting Standards
The Japanese “Generally Accepted Accounting Principles (GAAP)” is made up of:
- Business Accounting Principles issued by the Business Accounting Council (BAC);
- Accounting Standards issued by the Accounting Standards Board of Japan (ASBJ);
- Practical Guidelines issued by the JICPA.
Accounting Regulation Bodies
BAC
ASBJ
JICPA
FASF
Accounting Reports
The Commercial code gives the required regulations for a Limited Liability Company (Kabushiki Kaisha) to prepare an annual report and appendix.The annual report must be submitted to the general assembly of shareholders and must include the balance sheet and the income statement.
Publication Requirements
Only companies quoted in the stock-exchange have to publish their accounts. According to the law of transferable securities and the law of exchange, registrants must file to the Ministry of Finance the annual and biannual statement reports, as well as a copy in the foreign exchange markets where transferable securities are registered.
Professional Accountancy Bodies
JICPA , The Japanese Institute of Certified Public Accountants
Tokyo certified public tax accountants’ association
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact the Board of Audit of Japan, the Japan Corporate Auditors Association (JCAA) and the Certified Public accountants and auditing oversight board
Accounting News
Accounting news in Japan
Accounting diary in Japan
Japan accounting news on einnews.com

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Tax Rates

Consumption Taxes

Nature of the Tax
Japanese Consumption Tax (JCT).
Tax Rate
National consumption tax :4%
Calculated on the total amount of sales (excluding sales not subject to tax) and once the total amount of purchases subject to tax has been deducted.

Local consumption tax : 1%
Calculated on the total amount of consumption tax due.
Reduced Tax Rate
None
Other Consumption Taxes
Other consumption taxes are levied at the national level and the local level: liquor tax, tobacco tax, gasoline tax, aviation fuel tax, liquefied petroleum gas tax, petroleum tax, motor vehicle tax, etc.
 
Find Tax Professionals in Japan on GlobalTrade.net.
 

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Corporate Taxes

Company Tax
30% of the profit for companies of more than 100 million JPY
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income; non-resident companies are taxed only on Japanese-source income. A company that has its principal or main office in Japan is considered to be resident. For additional information.
Capital Gains Taxation
Taxed at the corporate tax rate.
Capital gains tax on land transfers is subject to a specific method of calculation.
Main Allowable Deductions and Tax Credit
Bad debt, repairs, natural disasters, charitable donation, R&D expenses, etc.
Other Corporate Taxes
Stamp tax, registration and license tax.

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Individual Taxes

Tax Rate

Personal tax rate Progressive rate up to 40%.
Click here to visualize the method of calculation
.
From JPY 1,950,000 to 3,300,000 10%
From JPY 3,300,000 and 6,950,000 20%
From JPY 6,950,000 to 9,000,000 23%
From JPY 9,000,000 to 18,000,000 33%
More than JPY 18,000,000 40%
Local taxes Individual inhabitants tax and individual enterprise
tax. Vary according to the locality
Effective taxation Up to 50%
Allowable Deductions and Tax Credit
Dependent spouse, young children, disabled and elderly dependents, social insurance, etc.
Special Expatriate Tax Regime
No special expatriate tax regime in Japan.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of double Taxation Agreements
See the list of Japanese Tax Treaties.
Withholding Taxes
Dividends: 20%, Interest: 20%, Royalties: 20%

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Sources of Fiscal Information

Tax Authorities
National Tax Agency Japan
Other Domestic Resources
Information on the Japanese tax system
Income tax guide for foreigners

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Find more on GlobalTrade.net about Taxes and Accounting in Japan.
 

Intellectual Property

National Organizations
Japan Patent Organisation (JPO)
Japan Patent Information Organization (JAPIO)
Regional Organizations
Intellectual Property Rights Experts Group (IPEG), intellectual property resource of each member economy of the APEC community
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Law, 1999
20 years renewable Patent Cooperation Treaty (PCT)
Strasbourg agreement Concerning the International Patent Classification
Trademark
 
Trademarks Law 1997
The Unfair Competition Prevention Law, which is enforced by the METI, provides additional trademark protection.
10 years renewable every 10 years Trademark law treaty
Nice agreement
Protocol relating to the Madrid Agreement
Design
 
Design Law 1997
15 years  
Copyright
 
Copyright Law 2006
Berne convention
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Utility Model Law 1997
10 years  

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Legal Framework

Independence of Justice
Yes
Equal Treatment of Nationals and Foreigners
In the texts justice ensures non-discriminatory treatment of all cases. But in practice, not being able to speak Japanese can lead to a lack of equity.
The Language of Justice
Japanese only
Recourse to an Interpreter
No guidelines exist to ensure effective communication between judges, lawyers, and non Japanese-speaking defendants. No standard licensing or qualification system exists for court interpreters, and trials proceed even if no translation or interpretation is provided for the accused.
Sources of the Law and Legal Similarities
The system is modeled on European systems with Anglo-American influences.
Checking National Laws Online
Lexadin, the world law guide
Japanlaw
 
Find Legal Experts in Japan on GlobalTrade.net.
 

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Standards

National Standards Organizations
The Japanese Industrial Standards Committee (JISC) depending on the METI (the Ministry of economy, trade and industry)
The Japanese Agricultural Standards (JAS)
Integration in the International Standards Network
The JISC is a member of:
- The International Standard organization (ISO);
- The International Electrotechnical Commission (IEC);
- The APEC/SCSC, Sub Committee of Standards and Conformance of the Asia Pacific Economic Cooperation;
- The ASEM/TFAP/SCA, Trade Facilitation Action Plan/Standards and Conformity Assessment of the Asia-European meeting;
- The Pacific Area Standards Congress.
Classification of Standards
JIS + 1 letter showing the technical area + 4-digit number showing the rank in the JIS division.
Online Consultation of Standards
The publication of standards is entrusted to the JSA (Japanese Standards Association) which is the “publishing house” of the JISC. The JSA website gives access to the JISC standards.
Certification Organizations
Japan Accreditation System for Product Certification Bodies (JASC)
Japan Accreditation Board for Conformity Assessment (JAB)
International Accreditation Japan (IA Japan)

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Business Practices

General Information
Japanese business culture on the Communicaid website
Japanese culture and customs as seen by the Kwintessential website
Japanese business culture as seen by the Kwintessential website
Japanese business culture on the Executiveplanet website
Opening Hours and Days
Offices are closed on Saturday and Sunday.
 

Public Holidays

New Year 1st January
Coming of Age Day January
Foundation of the Nation Day Beginning-mid February, changes according to the year
Spring Equinox End of March, changes according to the year
Showa Day End of April, beginning of May, changes according to the year
Constitution Day Beginning of May, changes according to the year
Greenery Day Beginning of May, changes according to the year
Homage to the Sea July
Respect for Elderly People Day September
Autumn Equinox End of September, changes according to the year
Sport Day October
Culture Day Beginning of November, changes according to the year
Work Recognition Day End of November, changes according to the year
The Emperor’s Birthday End of December, changes according to the year
 
Holiday Compensation
When a public holiday falls on a Saturday, companies close on the following Monday to compensate.
 

Periods When Companies Usually Close

New Year 1 week around New Year
Golden week 1 week from the end of April to the beginning of May
O-Bon festival 1 week mid August
 

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