In the case the amount of tax in previous year was more than certain amount, the tax payer needs to make tentative, provisional tax payment for the current year.
Assumed that a person is operating his company in Japan for several years and fiscal year end of his company is the end of December. So, his company usually submits tax filing in February (with respect to corporation tax).
Let’s say the amount of corporation tax in 2021 was 200,000 yen. Meaning his company paid corporation tax in February 2022. In this case it needs to pay 100,000 yen around June 2022 and this 100,000 yen is called Yotei Nozei (prepaid tax=estimated tax payment=よていのうぜい or 中間納付＝ちゅうかんのうふ).
Though his company has not calculated the amount of profit (taxable income) for 2022 yet, his company needs to pay estimated corporation tax (Yotei Nozei) in advance.
In this way, tax office can certainly collect taxes.
And his company can pay corporation tax in installments.
If the amount of corporation tax in 2021 was 200,000 yen, it needs to pay 100,000 yen (provisional tax) around June.
If the amount of corporation tax in 2021 was 500,000 yen, it needs to pay 250,000 yen (provisional tax) around June.
The company does not need to submit tax filing around June. It can just wait for arrivail of tax invoice and pay it.
Then, after December 2022, his company will calculate the amount of profit for 2022 and know correct corporation tax amount.
(Let’s say it paid 100,000 yen as an estimated tax payment. And fixed corporation tax is for 2022 is 70,000 yen)
If the amount of fixed corporation tax (e.g. 70,000 yen) is less than 100,000 yen, it can receive refund of corporation tax. So it will receive 30,000 yen from the tax office.
If the amount of fixed corporation tax is 150,000 yen, it needs to pay additional corporation tax of 50,000 yen in February 2023.
