🇯🇵 Corporate Tax in Japan

Headline rate: 23.2% (national) + local taxes ≈ 30–34% effective

Stock Company (KK)

A KK is subject to national corporate income tax at 23.2% on taxable income. In addition, the company pays local inhabitants tax (approximately 5% of the national tax liability) and enterprise tax (3–7% depending on the prefecture and income level). The combined effective tax rate is typically 30–34%. Japan imposes a 20.42% withholding tax on dividends paid to non-resident shareholders, which may be reduced under an applicable double tax treaty. Capital gains are generally treated as ordinary income and taxed at the standard corporate rate. Consumption tax (VAT equivalent) is 10% on most goods and services, with a reduced rate of 8% on food and beverages. Small companies with taxable income up to JPY 8 million benefit from a reduced national rate of 15%.

Limited Liability Company (GK)

A GK is treated as a corporation for Japanese tax purposes and is subject to the same national, prefectural, and municipal taxes as a KK. The combined effective tax rate is 30–34%. The small company reduced rate of 15% applies to the first JPY 8 million of taxable income if the company has capital of JPY 100 million or less. Consumption tax obligations are the same as for a KK. One notable point: a GK can elect to be treated as a pass-through entity for US tax purposes under the US "check-the-box" rules, making it a popular choice for US-based investors and companies structuring their Japanese operations.

Key Facts

Double tax treaties: 84
Memberships: G7, G20, OECD, WTO, APEC, UN, CPTPP
Legal system: Civil law (based on German model)
Fiscal year: Company chooses (most use April–March)

This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.