Introduction
When companies expanding internationally conduct business in Japan, managing the schedule of "when and what to pay taxes" is extremely important for maintaining tax compliance and avoiding penalties and late payment risks. Here, we will organize the so-called "Japan Tax Calendar," focusing mainly on key tax items such as corporate tax, consumption tax, and withholding tax. Particularly from the perspective of foreign companies' Japanese subsidiaries and branches, we will also explain practical points that should be noted from the viewpoint of an international tax expert.
1. Setting the fiscal year and accounting period
To understand the tax payment schedule for corporate taxes, the first thing to grasp is the setting of the "taxation period (accounting period)." In Japan, the taxation period for corporations is the business year defined in their articles of incorporation and other documents.
For example, many corporations adopt a fiscal year ending in March (business year from April 1 to the following March 31), but foreign corporations' branches in Japan can also align with their head office's accounting year.
This setting determines the deadlines for tax returns and payments, so it is necessary to first clarify when your company's tax period ends.
2. Deadline for filing and paying corporate tax (including national and local taxes)
Corporate taxes imposed on businesses operating in Japan, including corporate tax (national tax), corporate inhabitant tax, and business tax, are sometimes collectively referred to as "corporate taxes, etc." Here, we will organize the schedule for filing and payment of these taxes.
First, after the end of the tax period, it is common to submit the final tax return and make the payment within two months. For example, if the fiscal year ends on December 31, the deadline for filing and paying taxes is generally by the end of February of the following year. Additionally, by applying for an extension, it is possible to extend the filing deadline by one month.
Furthermore, corporations with a tax period exceeding six months are required to make interim declarations and interim tax payments (provisional tax payments). This system is based on the tax amount from the previous period and involves making interim tax payments during the tax period (after six months have passed).
For example, for a company with a fiscal year ending in March, it is generally the case that final tax returns and payments are made within two months after the end of the accounting period (by the end of May), and interim tax payments during the period may also be made by the end of August.
However, it is important to note that "even if the filing deadline can be extended, the payment deadline will not be extended." Even if an extension for filing is granted, taxes must still be paid by the specified deadline to avoid late interest and penalties.
For this reason, from the perspective of tax cash flow, it is important to prepare funds and manage the tax payment schedule in advance as the end of the period approaches.
3. Schedule for Withholding Tax and Individual Related Tax Matters
In addition to corporate taxes, businesses that pay salaries and compensation cannot overlook their tax obligations related to withholding taxes (such as salaries, compensation, and dividends).
For example, income tax withheld from salaries must generally be paid by the 10th of the following month. Additionally, small businesses with fewer than 10 employees that have received approval for "semiannual payments" have the option to pay on July 10th (for the first half of the year) and January 10th (for the second half of the year).
These are usually paid monthly, but the number of payments and other factors may vary depending on the scale of the business and the applicable conditions, so it is essential to check the relevant criteria.
Furthermore, property taxes and municipal and prefectural resident taxes (such as income tax and business tax) are also divided by payment deadlines for each municipality. For example, in the special wards of Tokyo, installment payments are set for January, June, September, and February.
For companies expanding internationally, withholding tax may arise from payments of compensation from overseas parent companies or domestic executive compensation payments, so the timing and process for these payments should be designed in advance.
4. Consumption Tax Declaration and Payment Schedule
For corporations and sole proprietors engaged in businesses with taxable sales in Japan, the consumption tax (and local consumption tax) administered by the National Tax Agency (hereinafter referred to as "NTA") is also important. First, it is necessary to understand the criteria for determining the taxable period and taxable entities. In the case of corporations, the accounting fiscal year serves as the taxable period.
Regarding the declaration and payment deadlines, for corporations, it is generally required to complete the final tax return and payment within two months from the day following the end of the tax period. For example, in the case of a corporation with a fiscal year ending on December 31, the declaration and payment deadline is typically the end of February of the following year. Additionally, it is possible to extend the declaration deadline by one month by applying for an extension.
Additionally, there may be cases where interim reporting and payment of consumption tax is required. If a corporation's annual consumption tax amount from the previous period exceeds a certain threshold, it may be subject to installment payments either three times a year or monthly.
Additionally, the "Qualified Invoice Preservation Method (Invoice System)" introduced in October 2023 is having an impact, and if there are transactions with business partners that are not registered as invoice issuing businesses on the purchasing side (from the perspective of input tax deduction), there is a possibility that input tax deductions may be restricted.
Since consumption tax is directly linked to cash flow from sales and purchases, it is necessary to prepare for it, taking into account not only the payment schedule but also institutional changes.
5. Summary
This article organizes the general schedule for domestic taxation; however, in practice, the payment deadlines and the presence or frequency of interim tax returns can vary depending on the size and industry of the corporation, the accounting period, the previous year's tax amount, and the applicable tax system (such as the blue return system and special provisions for small and medium-sized enterprises). When foreign companies expand their business in Japan, it is essential to consult with Japanese tax professionals early on to establish a tax payment schedule and cash flow, which will contribute to achieving both "tax compliance" and "stabilization of business operations."
In this way, it is essential to view the tax payment schedule not merely from a calendar perspective of "when to pay," but to understand it within the context of multiple tax categories such as corporate tax, consumption tax, withholding tax, and local taxes. This includes practical requirements such as advance preparation, understanding of the system, cash flow design, reporting, and record-keeping, which are key to demonstrating value as an international tax professional.