Tax in Japan: consumption tax, income tax, company tax, capital gains

Consumption Tax (消費税) in Japan

Value-added style with national + local components; input credit requires qualified invoices.

Standard rate

10%

Local name

Consumption Tax (消費税) — Consumption Tax

Type

Consumption Tax

Reduced rates

8%

Registration threshold

JPY 10 million sales (base period)

Filing

Annual (interim for larger filers)

Authority

National Tax Agency

Current rate since

1 October 2019

Company tax in Japan

The headline corporate income tax rate is 23.2%. In effect since 1 April 2018.

National corporation tax 23.2% (fiscal years beginning on/after 2018-04-01). Additional local corporation tax (10.3% of CIT), inhabitants and enterprise taxes raise the combined rate (OECD combined 2026: 29.74%). A 4% Defence Special Corporation Tax surtax for fiscal years beginning on/after 2026-04-01 was enacted in the 2025 tax reform (not read on an official page this session). Japan applies an IIR from 2024 (not read). | Cross-check: OECD 2026: central statutory CIT 23.2%, combined (central+sub-central) 29.74%; sub-central CIT 7.35%; small-business combined 21.37% Reduced rate 15%, not modelled as a small-company rate: Ordinary corporations with share capital of JPY 100 million or less (other than excluded large-group subsidiaries, 'tekiyo jogai jigyosha' at 19%): 15% on the first JPY 8 million of annual income; for fiscal years from 2025-04-01 the 15% becomes 17% where annual income exceeds JPY 1 billion (note 7).

Japan company tax calculator →

Did you know? Japan tax facts

• It took three prime ministers and roughly a decade to pass: Ohira's 1979 tax was abandoned after a public backlash at the October 1979 general election, Nakasone's 'sales tax' bill collapsed in May 1987, and only Takeshita finally got the 3% tax through the Diet in December 1988.

  Each earlier attempt was abandoned in the face of fierce public backlash before the tax finally took effect on 1 April 1989.

  Source: Nippon.com — The Political History of Japan's Consumption Tax ↗

• The tax helped wreck the ruling party: months after the 3% tax launched, the LDP lost its Upper House majority for the first time in the July 1989 election, with tax anger compounding the Recruit bribery scandal that had already forced Takeshita to resign.

  It was the first time the Liberal Democratic Party lost the popular vote in a national election since its 1955 founding (the vote was held 23 July 1989).

  Source: Wikipedia — 1989 Japanese House of Councillors election ↗

• Whether your convenience-store bento is taxed 8% or 10% runs largely on the honor system: big chains won't ask, so you're supposed to volunteer that you'll eat at the in-store counter so the clerk charges the extra 2%.

  Since the 2019 split rate, takeout food is 8% but eating in is a 'restaurant service' at 10%; instead of quizzing every customer, stores post signs asking shoppers to self-declare — and one investigation found eight or nine of ten customers pay the takeout rate yet use the eat-in space anyway.

  Source: Unseen Japan — Why Japan's Combini Eat-In Rules are Confusing ↗

• Bottled water is taxed at 8% but tap water at 10% — because tap water 'can also be used in washing machines and toilets' and so isn't legally a foodstuff.

  The same logic produces other oddities: mirin (sweet cooking sake) is 10% as alcohol, but a <1% alcohol 'mirin-style' seasoning gets the 8% food rate.

  Source: Nippon.com — Japan's Consumption Tax Hike: Exceptions and Inclusions ↗

• A snack-with-a-toy boxed set qualifies for the cheaper 8% food rate only if the food is at least two-thirds of the product and the total price is no more than 10,000 yen — otherwise it's taxed at 10%.

  This means a model kit bundled with a few candies tips over to 10%, but a snack with a small toy can stay at 8%.

  Source: Nippon.com — Japan's Consumption Tax Hike: Exceptions and Inclusions ↗

• Japan's 'hometown tax' lets city dwellers redirect part of their taxes to a rural town of their choice: donate, bear ¥2,000 yourself, deduct the rest from income and residence tax — and get a thank-you gift.

  Wikipedia: the system 'allows taxpayers who live in urban areas to contribute to rural areas in return for a tax credit from income tax and residence tax'; announced by Yoshihide Suga in 2007 and legislated in spring 2008; since 2019 return gifts must be local products and 'the percentage of the donation returned is limited to under 30%'.

  Source: Wikipedia — Hometown tax · checked 10 October 2026 ↗

• Japan's national income tax climbs in seven steps from 5% to 45%, the top rate applying above ¥40 million; employers withhold it from salaries and pay it over, while the self-employed file a 'kakutei shinkoku' return.

  Wikipedia: 'The Japanese income tax system has a progressive tax rate, that increases in stages as income increases', with a table running from 5% to 45% for income above ¥40,000,000; a company 'deducts income tax from your salary in advance and collectively pays the tax on your behalf'; self-employed people file a 確定申告 (kakutei shinkoku).

  Source: Wikipedia — Taxation in Japan · checked 10 October 2026 ↗

More stories, for every country that has one, on the tax facts page.