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Company workers

A company worker in Japan usually does not have to file income tax returns because its employer withholds income tax from monthly salary and bonus. The employer will make adjustments for the withholding tax on December or next January payroll so that the aggregated amount of the withholding tax becomes the same to the annual tax due amount for each employee.
Such adjustment made by the employer is called “Year-end tax adjustment” (YETA) or “Nenmatsu-chousei (年末調整) in Japanese.

However, in the following cases, you must file the annual income tax return by yourself by March 15th of the following year:

• Your gross salary for the year exceeded 20 million yen,
• You earned business income or capital gain,
• You have salaries paid by different employers, and the total amount of such salaries exceeded 200,000 yen for the year,

Besides, as for the following cases, it might be better to file an annual income tax return to claim a tax deduction and/or tax refund:

• The employer did not make YETA,
• Married, became a parent after YETA,
• Paid donation to public, charitable, or political organizations,
• Owing housing debt,
• Incurred capital loss,

The annual income tax return should be filed from February 16th to March 15th of the following year.
However, when you file the tax return to claim a tax refund, you may submit it anytime within five years from January 1st of the following year to the respective tax year.
You must fill out necessary sections on the tax return form then deliver it to the tax office nearby your home address.
Some tax credit, deductions, and allowances required evidence, such as withholding tax statement (prepared by the employer, etc.), payment certificate of life insurance premium, and receipts of medical expenses.

You may deliver the tax return form and the evidences to the tax office by either bringing in, postal mail, or electronic filing (e-Tax).
The e-Tax requires advance registration with the tax authority.
However, you are exempt from the registration when a registered tax accountant files your tax return via e-tax upon your request.

Self-employed (Freelancers, Sole proprietors)

You must file the annual income tax return when your entire income amount for the year exceeds 480,000 yen.
For tax return purposes, you need to keep books and records throughout the year then calculate business income once a year.
If you are qualified for “Blue Tax Return Filing” (BTRF), you are entitled to claim a special tax allowance, either 100,000 yen or 650,000 yen, from business income.
To obtain the BTRF status, you must apply to the tax office in advance.
When you apply to keep proper books following the double-entry bookkeeping system, the tax allowance of 650,000 yen is granted. Simple bookkeeping is entitled to the 100,000 yen allowance.

The annual income tax return should be filed from February 16th to March 15th of the following year.
You must fill out necessary sections on the tax return schedules, including calculation of business income, then deliver it to the tax office nearby your home address.
Some tax credit, deductions, and allowances required evidence, such as withholding tax statements (for certain types of income such as consideration for interpreter, translator, professional athlete, actor/actress, etc.).
You do not have to submit receipts and invoices to the tax office together with the tax return.
However, you must keep them for seven years for the tax audit trail.

You may deliver the tax return form and the evidence to the tax office by either bringing in, postal mail, or electronic filing (e-Tax).
The e-Tax requires advance registration with the tax authority.
However, you are exempt from the registration when a registered tax accountant files your tax return via e-tax upon your request.

Corporations

The “corporation” for tax purposes includes a non-incorporated association, a non-incorporated foundation, as well as a legal entity established under relevant law such as a company, a general incorporated association, a general incorporated foundation.
Non-incorporated associations and foundations are deemed as “corporation” for tax purposes then required to file tax returns for each fiscal year as same to a company if they are engaged in “continuous” “profit-making business”.

The corporation must keep proper books and records then prepare financial statements following Generally Accepted Accounting Principle (so-called GAAP).

Income of corporation, calculated based on profit stated in the financial statements, is subject to corporation tax (national tax), local corporation tax (national tax), corporate inhabitant tax (local tax), corporate enterprise tax (local tax), and local corporation special tax (national tax).

These taxes are imposed fiscal year basis, and the tax return filing due date is within two months from the ending date of each fiscal year.
The filing due date is extendable upon request from a taxpayer and approval by the tax authority.
The corporate tax returns should be filed to the following tax authorities:

You may deliver the tax return schedules and financial statements to the tax office by either bringing in, postal mail, or electronic filing (e-Tax).
The e-Tax requires advance registration with the tax authority.
However, you are exempt from the registration when a registered tax accountant files your tax return via e-tax upon your request.

From the fiscal year beginning on or after April 1, 2020, corporate tax and consumption tax return filing of “large corporation” will be accepted by only electronic filing (e-Tax).

The large corporation means a corporation with paid-in capital of more than 100 million yen at the beginning of the fiscal year.
Mutual Companies (Sougo Kaisha), Investment Corporations (Toushi Houjin), and Special Purpose Companies (Tokutei-mokuteki Kaisha) shall file the tax return by the e-Tax regardless of the capital amount.

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