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This week’s topic is about a common mistake in filing deadlines related to Japan’s consumption tax. Many small business owners misunderstand how to apply the Simplified Tax Scheme after using the 20% Special Rule . Key point: The special rule is limited If you used the 20% Special Rule , you may apply the Simplified Tax Scheme more flexibly. However, this special treatment applies only to the following tax year . 👉 It does NOT apply to all future years. Common misundersta

Japan plans to increase the tax-free limits for employee meals and allowances starting April 1, 2026 . This change is part of the FY2026 tax reform. 　　　What will change? 1. Company-paid meals (cafeteria, etc.) Current limit: JPY 3,500 per month New limit: JPY 7,500 per month If the conditions are met, this amount is not taxed as income for employees. 2. Late-night meal allowance (cash instead of food) Current limit: JPY 300 per time New limit: JPY 650 per time 　　　Important

Even with recent tax reforms, many tax troubles involving foreign residents in Japan come from misunderstandings , not from the tax rate itself. Below are foreigner-specific points to be careful about. 1. “Same tax rules as my home country” is a dangerous assumption Japan’s tax system is very different from many countries. Common misunderstandings include: Assuming all income is taxed only when paid Believing deductions work automatically like in other countries Thinking yea

After looking at the tax reform outline and its relation to tax returns, the key question for many foreign residents is simple: “How will this change affect me?” Below is a practical summary of what is likely to change — and what is not. 1. Lower income tax for many foreign residents The planned increase in: the basic deduction , and the minimum employment income deduction means that many foreign residents will have less taxable income . This mainly benefits: Employees with l

As Japan enters the tax return season , many foreign residents are preparing to file their individual income tax returns . This year, it is important to understand how the recent income tax reforms relate to tax returns , and what they do – and do not – affect. Do the new income tax changes apply to this tax return? In short: mostly no, but preparation is important . The income tax changes announced in the FY2026 Tax Reform Outline are future oriented . They mainly apply to i

In this series, we start with individual income tax , because the tax return season is approaching and many foreigners are directly affected. Why individual income tax comes first Most foreign residents earn salary income or business income in Japan. Income tax changes affect monthly payroll , year-end adjustment , and final tax returns . Even small rule changes can change the amount of tax you pay or get refunded . Main Income Tax Changes in the FY2026 Outline 1. Increase

In December, Japan’s ruling parties — the Liberal Democratic Party (LDP) and the Japan Innovation Party — announced the FY2026 Tax Reform Outline . This “tax reform outline” is an important policy document. It shows what tax changes the government plans , before they are turned into laws and included in the national budget. What does the Tax Reform Outline mean? In Japan, major tax changes usually follow this process: Tax Reform Outline is announced (December) Budget bills

Following last weeks’ notice, here are practical tips to help foreign residents and business owners avoid unlicensed tax preparers in Japan. 1. Check the License A licensed tax accountant in Japan is called a Certified Public Tax Accountant (Zeirishi) . They are registered with the Japan Federation of Certified Public Tax Accountants’ associations and have an official registration number. You may ask directly : Are you a licensed Zeirishi? What is your registration number?

As Japan enters the tax filing season , foreign residents may be approached by individuals offering low-cost tax return preparation or tax advice. Please be careful — using an unlicensed tax preparer can be illegal and risky. In Japan, only a licensed Certified Public Tax Accountant (Zeirishi) is legally allowed to provide paid tax advice or prepare tax returns. Hiring someone without this qualification may result in incorrect filings , additional tax assessments , penaltie

This week’s topic is important for sole proprietors in Japan , and it is also relevant for small corporations . If you plan to apply the Simplified Consumption Tax Scheme starting January next year , you must submit the required notification by December 31 of this year .　Missing this deadline may result in a higher consumption tax burden . 　 What is the Simplified Consumption Tax Scheme? The Simplified Consumption Tax Scheme is available to businesses whose taxable sales in

Japan’s financial regulator, the FSA, is working to reclassify cryptocurrencies such as Bitcoin and Ethereum as regulated financial products. As part of this overhaul, crypto profits may be taxed under a flat 20% “separate taxation” regime — instead of the current “miscellaneous income” system with rates up to 55%. The reform is expected to be included in the 2026 tax package and may take effect as early as 2026 or 2027, depending on parliamentary approval. Exact details — su

[Overview] The National Tax Agency and related notices have updated the tax-exempt limits for commuting allowances. This summary highlights key points for employers. For exact amounts and detailed application rules, please consult the official NTA publications. [Key Points] 1. Enactment/Effective Date: The amendment was announced and effective on November 20, 2025 . 2. Retroactive Application: The change applies retroactively to commuting allowances paid from April 1, 2025 o

Part 2: Why Digitalization Benefits Foreign Business Owners 第2回：電子化が外国人経営者にとって有利な理由 For foreign business owners operating in Japan, digital Year-End Tax Adjustments help reduce language barriers, simplify documentation, and cut down on administrative workload. Electronic submission minimizes errors caused by manual entry and provides clearer instructions. Because the system automates data import for insurance payments and dependents, employers no longer need to interpret han

Part 1: Japan’s Push for Digital Year-End Tax Adjustments 第1回：日本が進める年末調整の電子化 Japan’s National Tax Agency (NTA) is promoting digital systems for the Year-End Tax Adjustment (known as "nenmatsu chousei"), a process used by employers to finalize employees’ annual income tax. With this initiative, employees can submit key forms—such as the Basic Exemption Declaration, Insurance Premium Declaration, and Dependent Deduction Declaration—electronically instead of on paper. The system

Why Digital Year-End Adjustment Benefits Foreign Business Owners For foreign small business owners in Japan , the electronic year-end adjustment offers several clear advantages. ✅ Easier communication No need to explain complicated Japanese tax forms to employees — the online system guides users step-by-step, often with translation support. ✅ Timesaving for employers No collecting, checking, or filing stacks of paper. Digital submission means automatic calculation and fewe

The Digital Shift: Japan’s Move to Electronic Year-End Tax Adjustment The National Tax Agency (NTA) has started promoting the digitalization of year-end tax adjustment procedures .　Traditionally, companies in Japan collect several paper forms from employees every December — such as the Dependent Deduction Form and Insurance Premium Declaration .　Now , the NTA aims to move these processes online , reducing manual paperwork for both employers and employees. How it works: Empl

Impact: What Employers Should Prepare For This change may seem small, but it affects how companies handle payroll and year-end adjustments in December. Some employees who were previously ineligible may now qualify for the Dependent or Spouse Deduction , which means: Additional paperwork (re-submission of forms) Possible adjustment of withholding tax for December payroll Updated information to be reflected in annual reports and e-Tax submissions Employers should:✅ Communic

Notification: Re-submission of Dependent Deduction Form Starting December 2025, Japan will introduce an important change to the income requirement for dependents under the tax system. Due to this revision, some employees may newly qualify their family members as dependents or spouses under the updated rules.Employers should ask these employees to re-submit the “Declaration of Exemption for Dependents (for 2025)” form before completing year-end adjustment procedures. This a

The new reporting rule has raised debate in Japan. Some people welcome stricter controls, pointing to cases where foreign companies...

From July 1, foreigners buying large plots of land in Japan must report their nationality to local governments. This applies to deals...