Japan Corporate Tax Guide (法人税)

Japan's corporate tax system comprises national corporation tax (法人税), local inhabitant tax (法人住民税), and enterprise tax (事業税), yielding an effective rate of approximately 30%. SMEs with capital under JPY 100M benefit from reduced rates on the first JPY 8M of taxable income. R&D and other credits are available to reduce the burden.

Japan's 法人税 (Corporate Tax) is administered by the National Tax Agency. For related guidance, see our Personal Tax Guide →, Consumption Tax Guide →, and Investment Income Guide →.

Corporate Tax Components and Rates 2026

National corporation tax (法人税): ~23.2% of taxable income. Reduced to ~15% for the first JPY 8M of taxable income for SMEs with capital of JPY 100M or less.
Local inhabitant tax (法人住民税): Prefectural (~2.0%) + municipal (~6.8%) = ~8.8% (calculated as a percentage of the national corporation tax, plus a per-capita levy).
Enterprise tax (事業税): A deductible business tax levied on income at progressive rates of ~3.5% to ~6.7% (varies by prefecture and industry).
Effective rate: Approximately 30% for large corporations (combined national + local + enterprise tax after deductibility adjustments).

SME Reduced Rates

Companies with capital of JPY 100M or less (中小企業) pay a reduced national corporation tax rate of ~15% on the first JPY 8M of taxable income (subject to phase-outs based on group structure).
Income above JPY 8M is taxed at the standard ~23.2% rate.
Certain micro-enterprises may also qualify for enterprise tax reductions at the prefectural level.

R&D Tax Credits (研究開発税制)

General R&D credit: 2–4% of qualifying R&D expenses (incremental basis), capped at 25% of the national corporation tax liability.
Open innovation credit: Up to 30% of qualifying payments to universities and research institutes.
Unused credits can be carried forward up to 1 year (limited to 25% of tax in each carryforward year).

Other Key Incentives

Salary increase credit: Up to 15% tax credit for companies that increase salaries by at least 4% compared to the prior year.
Digital transformation (DX) credit: 3–5% credit on qualifying IT investments (limited to 20% of corporate tax).
Green innovation credit: 10% credit on qualifying carbon-reduction capital investments.

Filing Requirements

Filing deadline: Within 2 months after the end of the fiscal year (e.g., 31 May for a 31 March year-end).
Interim returns: Required for companies with prior-year tax exceeding JPY 200,000 (semi-annual or quarterly).
Returns must be filed electronically via e-Tax. Consolidated filing is available for qualifying corporate groups.
Losses can be carried forward up to 10 years (with a 50% cap on taxable income in each year).