Taxes
Japan — Tax: Corporate Tax
Japan's national corporate tax rate is 23.2% for standard corporations; SMEs with paid-in capital of ¥100 million or less get a reduced 15% rate on the first ¥8 million of taxable income. Adding local corporate taxes (enterprise tax, local corporate tax, and inhabitants tax) brings the effective total corporate tax rate to roughly 30% for most companies, varying by municipality and company size. For fiscal years beginning 1 April 2026, the national local corporate tax is fixed at 10.3% of the corporate tax liability, and a new special corporate tax to strengthen defence capabilities applies for fiscal years starting on/after 1 April 2026 — calculated at 4% on the base corporate tax amount less a basic deduction of ¥5 million.
Key facts
- National corporate tax: 23.2% standard; SMEs (paid-in capital ≤¥100M): 15% on first ¥8M of taxable income.
- Effective total corporate tax rate (incl. local taxes): ~30%, varying by municipality/size.
- From FY starting 1 April 2026: national local corporate tax fixed at 10.3% of corporate tax liability.
- New defence-capability special corporate tax (FY starting 1 April 2026+): 4% on (base corporate tax − ¥5M deduction).
Costs
- National corporate tax (standard): 23.2%
- SME reduced rate (first ¥8M taxable income): 15%
- Effective total (incl. local taxes): ~30%
Common mistakes
- Estimating total corporate tax liability from the 23.2% national rate alone, without accounting for local enterprise/inhabitants taxes bringing the effective rate to ~30%.