Q83: I am considering entering the Japanese market. Could you highlight some important points about the consumption tax in the first year?
ringo tax corporationA:Hello to everyone considering entering the Japanese market. When planning to expand your business in Japan, tax-related procedures are extremely important. It is particularly crucial to understand the consumption tax in the first year. Let me explain the key points about the consumption tax for the first year.
For a Japanese Corporation
When establishing a Japanese corporation, the consumption tax for the first year is determined based on the amount of capital. Since there is no base period, if the capital amount on the starting day of the business fiscal year is 10 million yen or more, it will be subject to consumption tax from the first year. If the capital is less than 10 million yen, it will be exempt from consumption tax unless a special election is made.
For a Japanese Branch
Similarly, when a foreign corporation establishes a branch in Japan, the consumption tax for the first year is determined by the amount of capital. If the capital is 10 million yen or more, it will be subject to taxation; if it is less than 10 million yen, it will be exempt unless a special choice is made. However, if some time has passed since the foreign corporation was established, a base period will be set, and if there are no taxable sales during that period, it will be exempt.
These are the basic points about the consumption tax for the first year. However, Japanese tax laws are complex, and consulting a Japanese tax accountant is essential for specific procedures and detailed regulations.
Our firm has English-speaking Japanese tax accountants available. If you have any questions or need consultation regarding tax matters for entering the Japanese market, please feel free to contact us. We are here to support your business expansion.
Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation
