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Tax in operation of  a company in Japan

Tax in operation of a company in Japan

Before you incorporate a company in Japan, you would like to know cost to operate Company (There is not difference between KK company and LLC) in Japan.   Menu

1 Calculation of Director, Employee’s taxable income

2  Income tax rate

3 Example of Calculation of Income tax 
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1  In the case you (director and shareholder of company) operate company in Japan, you and your employee will receive salary from your company in Japan.   When you receive salary, you will pay income tax in Japan. The rate of income tax differs depending on amount of taxable income (kazei shotoku).

(taxable income is different from amount of salary. Because you can use several deductions)   In order to know amount of Taxable income, you need to know amount of employment income deduction (Kyuyo shotoku kojo).   Assumed that you receive salary of 5 million yen per a year from your company.   Calculation formula is like this.

5 million yen × 20% + 540,000 yen = 1.54 million yen.   (This 20% and 540,000 is stipulated by act)   This is deductible amount (Kyuyo shotoku kojo) from your salary amount.   So, 5 million yen – 1.54 million yen = 3.46 million yen.   Moreover, you can use deduction of 380,000 yen (basic deduction). (If you have spouse etc, you can apply for another deduction, too)   So, 3.46 million yen – 380,000 yen = 3,080,000 yen is your taxable income as salaried income earner.  

2  As for Income tax rate in Japan (shotoku zei ritsu)

  taxable income (per a year)          Income tax rate               Deduction
……………………………………………………………………………………………………….. less than 1.95 million yen            5%         0 yen
……………………………………………………………………………………………………….
1.95million yen~3.30million yen       10%        97,500 yen
………………………………………………………………………………………………………. 3.30 million yen ~ 6.95million yen     20%        427,500 yen
………………………………………………………………………………………………………. 6.95million yen ~ 9 million yen      23%        636,000 yen
………………………………………………………………………………………………………. 9.million yen ~ 18 million yen       33%        1,536,000 yen
……………………………………………………………………………………………………….  

3 Example of Calculation of Income tax 

  ex) In the case amount of taxable income is 7 million yen,
7 million yen×0.23-636,000 yen=974000 yen is amount of income tax.

→ If you want to know how to calculate resident tax, corporate tax in Japan

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