Whether the company is classified as “small” for consumption tax filing purpose is determined following the below steps; 1. Is taxable sales amount recognized during two terms prior to the current fiscal year JPY 10 million or less? 2. If the answer to the above question is yes, is either of taxable sales amount or… [Read More]
I heard that small companies do not have to pay consumption tax. How small are we talking about?
If my company does not pay my pension directly, should I be making payment to the Japanese government directly? Am I legally obligated to opt in to the Japanese pension system? What will happen if I leave the country before retiring?
In the case your company does not pay your pension directly, you should make payment to the National Pension Agency on your own. If you meet the following two conditions, you are legally obligated to opt in to the Japanese pension system. Condition1) You live in Japan Condition2) You are at latest… [Read More]
What is the actual formula for calculating consumption tax? Is it a straight 5%, or something less? What factors are taken into consideration?
Consumption tax ratio is 5% (4% for national tax plus 1% for local tax). There are two calculation methods for the consumption tax. * As of May 18th, a measure to increase the national consumption tax is under discussion at a Lower House special committee. Calculation formula: 1) Ordinary Calculation Method Consumption tax… [Read More]
My friend and I have been thinking about starting our own consulting firm. What is the difference between a Godo Kaisha and a Kabushiki Kaisha? Which would be a better choice for our purposes?
The answer to your question will depend a bit on your priorities. The company form called Kabushiki Kaisha (KK) tends to have a bit more value in terms of recognizabilty in comparison to a Godo Kaisha (GK), but it also costs more to establish and requires at least one shareholder’s meeting a year – which… [Read More]
Are expenses paid for an international insurance plan deductible from my Japan income taxes? Are expenses paid for medical procedures performed overseas similarly deductible?
1.An international insurance plan Premiums on life insurance contracts concluded in Japan may be deducted if the taxpayer, the taxpayer’s spouse, or another family member is the beneficiary. However, contracts concluded in a foreign country with a foreign insurer are not eligible for deduction. Therefore premiums paid on international insurance plans are not deductible from… [Read More]
What is involved in shutting down a company? What paperwork has to be filed?
If a decision is made to shut your company down, it will be necessary to follow certain procedures under Japanese corporate law for dissolution and liquidation of a Japanese stock company. The first step that is required is to have the company elect to dissolve itself, which should be passed as a special resolution at… [Read More]
I’m thinking of incorporating a company, but won’t be doing any business through it for a year or so. What are the minimum taxes and other fees that I have to pay to keep such a semi-dormant firm going?
In principle, the minimum tax a dormant company will owe is the per capita levy which is taxed according to the scale of the amount of paid in capital (shihonkin) and the number of employees the company is hiring. For example, if the amount of the paid in capital of a company which is established… [Read More]
Should I charge a customer consumption tax on services I have provided them if they are located outside Japan?
Assuming the customer is a non- resident of Japan, you should not charge the customer consumption tax on the services. The only exceptions to this rule are: (a) For transport and storage services for assets located in Japan (b) For meals and accommodation services provided in Japan (c) For services available in Japan which are… [Read More]
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Like Us on Facebook. Below are contents we will be covering on Facebook. Tax Related Monthly Checklist Every month we will be updating the tax checklist relevant to majority of the companies which fiscal year end is December 31st. Also, information regarding individual tax returns will be provided. Lunch Time! Photos Every week our staff… [Read More]
I am planning on leaving the country in the next 6-12 months. Do I have to pay national and local taxes if I leave? If I don’t, what happens?
A. Yes, you have to pay both national and local taxes when you leave. If you don’t, you will be subject to a penalty for failure to pay, as well as interest on the unpaid amount. For national taxes, you have to file a tax return and pay tax by March 15 of the following… [Read More]