Two changes take effect for fiscal years starting on or after 1 April 2026. How each one feeds into the total effective rate.
- Statutory audit threshold
- Registration timeline gap by entity type
- What is the Qualified Invoice System and what changes in 2026?
Japan's operational complexity centers on the gap between the statutory minimum required for a company to legally exist and the practical minimum required for a foreign national to be physically present and running it.
The October 2025 Business Manager visa reform means capital planning for a Japanese entity can no longer be decided on Companies Act minimums alone — if a foreign principal intends to reside in Japan as the entity's manager, JPY 30 million in paid-in capital, together with the accompanying experience, staffing and language conditions, is now the effective floor, not JPY 1.
What a company pays in Japan. Every figure below is published on the Japan country page.
| Japan | |
|---|---|
| Dividend tax | 20.315% for residents on listed-share dividends (15.315% national + 5% local, incl. 2.1% reconstruction surtax) · 20.42% for non-residents before treaty relief |
| Minimum share capital | JPY 1 legally (KK/GK) · JPY 30,000,000 practical minimum for a foreign owner-manager to qualify for the Business Manager visa (since Oct 2025) |
| Consumption tax | 10% standard · 8% reduced (takeaway food and non-alcoholic beverages, qualifying newspaper subscriptions) |
| Annual accounts filing | Final corporate income and consumption tax returns due within 2 months of fiscal year-end; a 1-month filing extension is available for corporate income tax with Tax Office approval (consumption tax permits no extension) |
| Statutory audit | Statutory audit by a CPA or audit corporation is required for "large" KK with paid-in capital of ¥500 million or more, or liabilities of ¥20 billion or more, and for any company voluntarily establishing an accounting auditor or audit/nominating committee |
What makes it complex in Japan
- Statutory audit threshold — — the Companies Act mandates a CPA or audit-corporation statutory audit for "large" KK with paid-in capital of JPY 500 million or more, or liabilities of JPY 20 billion or more, and for any company that voluntarily establishes an accounting auditor or audit/nominating committee.
- Registration timeline gap by entity type — — GK: roughly 7–10 business days once documents are ready (2–4 weeks overall); KK: 14–21 business days due to mandatory notarization (4–8 weeks overall) — a structural reason many foreign entrants start with a GK and convert later.
What is the Qualified Invoice System and what changes in 2026?
Since October 2023, businesses must hold invoices from registered ("qualified") issuers to claim input consumption tax credits. A transitional measure currently allows partial credit on purchases from non-registered suppliers; that allowance steps down from 80% to 70% deductible starting October 2026, and continues stepping down through 2031.
Statutory audit threshold is one of the points HTLC Network handles for clients operating in Japan, within a single engagement that covers every other country they operate in — executed locally, governed centrally.
In Japan the scope is: Statutory accounts and consumption tax filings aligned with Japanese GAAP, including Qualified Invoice System compliance and its stepped-down transitional deduction rates.
See Accounting & Tax Compliance in Japan for the full scope, or the Japan country page for the statutory framework across every service.
Figures as published on the HTLC Network country pages, reviewed September 2026 and collected from public sources. They are not a substitute for advice on a specific case and should be verified before being relied on.