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Japan V.A.T. and Other Taxes

Japan Inhabitant Tax
In Japan, in addition to the rates of income tax for an individual and for corporations, an "inhabitant tax" is imposed that significantly increases the rate of effective tax that applies to the income of the business.
The method of calculation is rather complicated and is comprised of two different levies:
1) A levy on income
2) A levy on capital
There are small differences between the regions in Japan in regard to the final tax as a result of the location of the business, as well as taking account of the number of employees.

Japan Enterprise Tax
This tax is imposed on enterprises that are managed in Japan. The rates for corporations are 3.4% to 6.7% (the higher rate is in respect of a corporation with income in excess of 8 million yen).

Japan Consumption Tax
The tax is similar to value added tax and is, in fact, imposed on most sales and services provided in Japan and on imports.
A taxpayer may offset the consumption tax paid on expenses against the tax he has to pay on his income.
Consumption tax is 8% from April 2014 and 10% from October 2015.

Income that is exempt from Consumption Tax
  • Export
  • Sale of real estate
  • Foreign currency transactions
  • Interest
  • Sale of stamps
  • Medical services

  • Japan Inheritance and Gifts Tax
    Japan Inheritance Tax
    In the case of a Japanese resident, the tax is on all inheritances, including those that have their source overseas. For foreign residents, the obligation is solely in respect of assets in Japan. The rates of the tax are between 10% - 50% and they are imposed progressively according to the value of the asset.
    Relief - A basic exemption of 10 million yen. An additional exemption of 10 million yen for each heir.

    Japan Gift Tax
    The gift tax rates are between 10% - 55% and depend on the value of the asset.
    It should be pointed out that a gift given to an individual by a corporation is subject to income tax and not to gift tax.
    Relief - A basic exemption of 2 million yen.
    An additional exemption for a gift from an elderly parent, up to 25 million yens, is given in certain cases.

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