Accounting Standard & Audit
Accounting Standard
There are four permitted financial reporting frameworks;
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Japanese GAAP
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IFRS Standards
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Japan's Modified International Standards (JMIS)
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US GAAP
Statutory Audit Requirement
Companies fall in the categories below are required statutory audit.
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under Financial Instruments and Exchanges Act
Companies that are mainly listed on a Japanese stock market
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under Companies Act
Companies incorporated in Japan with either:
1) stated capital(Paid in Capital) at 500 million yen or more, or
2) Liabilities: 20 billion yen or more
Tax
Corporate
Corporate income tax consists of the followings;
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Corporate tax (national tax)
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Local corporate tax (local tax)
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Corporate inhabitant tax (local tax)
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Enterprise tax (local tax)
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Special corporate enterprise tax (a national tax)
Corporate tax (national tax) rates are follows;
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Paid-in capital of over 100 million Japanese yen (JPY): 23.2 %
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Paid-in capital of JPY 100 million or less, except for a company wholly owned by a company that has paid-in capital of JPY 500 million or more
1) First JPY 8 million per annum: 15 %
2) More than JPY 8 million per annum: 23.2 %
Effective tax rate including local tax diffes depending on the company size and taxable income, from 22.4% to 36.8%.
Individual
Resident taxpayers are taxed on their worldwide income.
Personal income taxe consists of the followings;
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Personal income tax (national tax): from 5% to 45% depending on taxable income
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Local inhabitant’s tax (local tax): a flat rate of 10%. It is generally imposed on a taxpayer’s prior year income.
Non-resident taxpayers are taxed only on their Japan-sourced income. A non-resident taxpayer’s Japan-source compensation (employment income) is subject to a flat 20.42%
Consumption Tax (VAT)
Tax rate: 10% (for certain goods such as foods etc., the tax rate is 8%)
Consumption tax is applicable for transfers goods, provides services, or imports goods into Japan.
Exports and certain services to non-residents are taxed at a zero rate.
Specified transactions, such as sales or lease of land, are not subject to taxation.
A business is exempted from consumption tax obligation if its taxable sales in the base period for the taxable period are equal to or less than JPY 10 million
Inheritance and Gift Taxes
Inheritance tax (national tax) is imposed on the recipients of an inheritance
Tax rate: 10-55%
The basic exemption is JPY 30 million plus JPY 6 million per statutory heir.
Gift tax (national tax) is imposed on the recipients of a gift
Tax rate: 10-55%
The annual gift exemption per recipient is JPY 1.1 million.