Filter insights by:
Filters applied:
Revenue recognition is a key performance metric affecting financial figures. This article explores examples of differences between accounting and tax treatment in Japan.
On 19 December 2025, Japan’s ruling coalition released the outline of the fiscal year 2026 (Reiwa 8) tax reform proposals. While the proposals introduce several individual amendments to corporate and international tax rules, collectively they reflect a broader recalibration of Japan’s tax policy - one that prioritizes strategic investment, domestic economic substance, and tighter alignment between incentives and measurable outcomes.The proposals reflect a clear policy shift toward targeted incentives that support capital formation, advanced technology development, and economic security, while simultaneously tightening eligibility criteria, reducing reliance on broad-based tax benefits, and strengthening compliance expectations. This article summarizes the key corporate and international tax measures based on publications issued by the Ministry of Finance.
A new Defense Special Corporate Tax has been introduced in Japan pursuant to tax reform legislation enacted on March 31, 2025. As a consequence of this legislative change, Japan’s statutory effective tax rate will be revised.
If you are planning on doing business in Japan, knowledge of the investment environment and information on legal, accounting, taxation and human resource frameworks are essential to keeping you on the right track. This guide has been prepared for the assistance of those interested in doing business in Japan. It does not cover the subject exhaustively but is intended to answer some of the important, broad questions that may arise. When specific problems occur in practice, it will often be necessary to refer to the laws and regulations of Japan and to obtain appropriate accounting and legal advice. This guide contains only brief notes and includes legislation in force as of November 27, 2024.
The 2025 Tax Reform included amendments to the Consumption Tax Act. This bulletin introduces revisions to the tax-free shopping system for foreign tourists and tax-free shops.
Many companies in Japan conduct lease transactions, such as office leases, copiers and vehicles, and these lease transactions are accounted for in accordance with IFRS, US GAAP or Japan GAAP and so on. Japan corporate tax law has particular treatments for lease transactions. This article provides an overview of leases from the lessee's perspective.
The 2025 fiscal year, known as Reiwa 7 in Japan, brings several changes to the corporate tax landscape. These reforms aim to enhance corporate competitiveness, encourage investment, and ensure fair taxation. This bulletin outlines the key aspects of the Reiwa 7 corporate tax reforms, based on the latest publications by the Japan Ministry of Finance.
Under the 2024 tax reform, the Japanese government strengthened tax credit for salary increase from the perspective of (a) easing the burden on citizens whose wage increases have not kept pace with rising prices, (b) aiming to achieve an economy where wage increases that fully exceed price increases are sustained and (c) supporting efforts to balance work and child-caring and promote the advancement of women. The main points of the revision are the establishment of a new definition called “medium-sized enterprises” and the raising of the tax credit ratio through the establishment of additional deductions for childcare support and the promotion of women's activities.
The deductibility of entertainment expenses under Japan corporate tax law is a complicated topic. This newsletter explains the deductibility of entertainment expenses in general and also in relation to the special sub-category of entertainment expenses for meals and drinks.
Japan's commitment to invigorating its small and medium-sized enterprises (SMEs) took a significant step forward with the announcement of the 2024 fiscal year tax reforms. These reforms, part of the Reiwa 6 year plan, focus on expanding the SME Business Reorganization Investment Loss Reserve System. This policy is tailored to empower SMEs to grow through strategic acquisitions and integrations.
The size-based business taxation system was introduced in 2004. The size-based business taxation system imposes “a value-added tax” and “a capital-based tax” on companies with stated capital of more than JPY100 million. The taxes are levied even where a corporation is in currently loss position. A value-added tax is levied based on the sum of the distribution of earnings (comprising remuneration and salaries, net interest paid and net rent paid) and profit or loss for a single year, and a capital tax is levied based on the amount of stated capital, capital reserve, other capital surplus etc. as defined by the Corporation Tax Law.
In accordance with the 2024 Japan Tax Reform, fixed amount of tax credit against National Income Tax and Local Inhabitant Tax will be implemented. This tax credit is a one-time deal and applicable to 2024 National Income Tax and 2024/25 Local Inhabitant Tax payable from June 2024.
An NK is a partnership stipulated in the Civil Code. NKs are sometimes used to design tax shelter products. This bulletin contains an overview of the legal framework of NKs in the Civil Code, tax treatments of NKs, discusses a court case where a judgement was made on a tax shelter structure using an NK and the anti-avoidance rules.
A corporation is allowed to deduct monetary claims when they become fully unrecoverable. Corporation Tax Law Basic Circular (“CTLBC”) lists cases where a deduction of monetary claims is allowed.
The National Tax Agency (NTA) in Japan announced on 30 March 2023 a change in interpretation of “the end of the accounting period for which the distribution of profits takes place” under (Article 10, Japan Luxembourg Tax Convention (JLTC)), following a case determined by the Tokyo High Court on 16 February 2023.
The electronic preservation system for books and documents is a system for storing books,receipts, invoices, financial statements,and other national tax related documents that are required to be preserved under tax law in electronic data format instead of paper format, and is divided into the following three categories. The system is stipulated in “ the Act on Special Provisions concerning Preservation Methods for Books and Documents Related to National Tax Prepared by Means of Computers(“the Act").