For many expatriate entrepreneurs and English-speaking business owners in Japan, the “blue form” (Ao-iro Shinkoku) and the various tax deadlines can feel like a daunting tasks.

Whether you are running a Godo Kaisha (GK) or a Kabushiki Kaisha (KK), understanding your tax obligations is the first step toward long-term sustainability and peace of mind.

The Japanese Tax Calendar

Japan allows companies to choose their own fiscal year.

• The Two-Month Rule: You must file your corporate tax return and pay the resulting taxes within two months of the end of your fiscal year. If your fiscal year ends on December 31st, your deadline is February 28th (or 29th).
• Extensions: While it is possible to apply for a one-month extension for the filing of the return, the payment of the tax is still due by the original deadline. Interest (Entei-zei) applies if the payment is late.

---

The Layers of Corporate Taxation

In Japan, “Corporate Tax” is actually a shorthand for several different taxes levied by both the national and local governments. For a small business, you are essentially looking at four main components:

National Corporate Tax (Ho-jin Zei)

This is the primary tax on your profits. For small and medium-sized enterprises (SMEs) with capital of 100 million yen or less, the rates are progressive:

• The first 8 million yen of annual income is taxed at a lower rate (approx. 15%).
• Income exceeding 8 million yen is taxed at the standard rate (approx. 23.2%).

Local Corporate Tax (Chiho Ho-jin Zei)

This is a national tax used to redistribute wealth among local governments, calculated as a percentage of your national corporate tax amount.

Corporate Enterprise Tax (Ho-jin Jigyo Zei)

Paid to the prefecture where your office is located. This tax is unique because it is actually deductible as an expense in the following fiscal year’s tax calculation.

Corporate Inhabitant Tax (Ho-jin Jumin Zei)

This is paid to both the prefecture and the municipality. It consists of two parts:

1. Income-based portion: A percentage of your national tax.
2. Per-capita levy: A flat fee based on your capital and number of employees. Crucially, you must pay this even if your company records a loss.

---

“Blue Return” (Ao-iro Shinkoku)

If there is one thing you must do when starting a company in Japan, it is applying for the Blue Return status. This requires you to maintain a certain standard of bookkeeping (double-entry), but the benefits are massive:

• Net Operating Loss (NOL) Carryforward: You can carry forward losses for up to 10 years to offset future profits.
• Loss Carryback: In some cases, you can apply a current loss to the previous year’s profit to get a refund on taxes already paid.
• Special Depreciation: You can write off the full cost of certain assets (up to 300,000 yen per item) immediately.

---

---

---

Summary Table: Tax Rates at a Glance (Approximate)

Tax Category	Basis	Rate for SMEs (Approx.)
National Corporate Tax	Taxable Income	15% (up to 8M) / 23.2% (over 8M)
Effective Tax Rate	Total combined burden	Approx. 30% – 34%
Per-Capita Levy	Capital/Size	Min. ~70,000 JPY/year (even if in deficit)

---