If you are starting a business in Japan, you must consider the applicable taxes. In this blog, I will explain the taxes in Japan in general and roughly.

1. Corporation Tax or Individual Income Tax

This tax is taxed to income. For corporations, its rate is around 30%. For individual sole proprietors, it is 15% to 55%, according to income. Both include local taxes.

2. Consumption Tax, Japanese VAT

This tax rate is basically 10%. Food and drink are taxed at 8%. Taxpayers must pay taxes calculated by deducting paid taxes to suppliers or others from received taxes.

3. Withholding Tax

This tax is taxed on employees’ salaries or so. Employers must keep a particular portion of wages and pay it. It is an employee’s tax, but employers have a duty to withhold it.

4. Fixed Property Tax

It is taxed to hold assets, including properties, and its rate is 1.4%.

5. Purchasing Real Property Tax

It is taxed to purchase real properties, and its rate is around 3%.

6. Social Insurance

Social insurance is not considered a tax in Japan because both are clearly distinguished. However, social insurance is similar to taxes, so I will explain it here. In corporations, around 30% of salaries are burdened by companies and employees almost equally. Corporations can deduct their burdens for tax purposes. As one of the membes of the group ‘ Business Support in Japan’, I have many experiences and deeply and wide knowlage as well as strong desire to support forign people and companies who starting businesses in Japan. Please feel free to contuct me if you have any questions and concerns.