Q19: When remitting profits earned in Japan to the home country of a foreign company, which is more advantageous, a Japanese corporation or a Japanese branch?
ringo tax corporation
Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation
A: A Japanese branch is more advantageous as there is no tax on remittances to the home country.
Q: Why is a Japanese branch more advantageous?
In the case of a Japanese branch, remittances to the foreign parent company are treated as mere transfers of funds within the same entity and are not subject to taxation. On the other hand, in the case of a Japanese corporation, remittances may be treated as dividends, interest, royalties, etc., and subject to income tax and a special reconstruction income tax withholding.
Q: Furthermore, what is a tax treaty?
A tax treaty is a treaty to avoid international double taxation, and Japan has concluded 68 treaties with 110 countries and regions. These treaties prevent the double taxation of profits and promote investment. However, not all countries have concluded treaties with Japan, and there are countries with which Japan has no treaty.
