Input tax on purchases from non-registered suppliers steps down from 80% to 70% deductible. What it costs to keep working with suppliers outside the system.
- Layered 2026 tax changes
- Qualified Invoice System step-downs
- What is the actual minimum capital to incorporate a company in Japan?
The more consequential structural fact for foreign entrants, however, sits outside the tax code. The Companies Act sets no meaningful minimum capital to incorporate a Kabushiki Kaisha (KK) or Godo Kaisha (GK) — JPY 1 is legally sufficient — but as of a Ministry of Justice ordinance effective 16 October 2025, a foreign national seeking the Business Manager residence status needed to actually run that company from within Japan must show at least JPY 30 million in paid-in capital, plus either three or more years of management experience or a relevant master's degree, at least one full-time employee, and Japanese-language proficiency held by the applicant or that employee. Capital planning for a Japan entity can no longer be decided on Companies Act minimums alone if a foreign principal intends to be resident and managing it.
What a company pays in Japan. Every figure below is published on the Japan country page.
| Japan | |
|---|---|
| VAT standard rate | 10% (consumption tax) |
| VAT reduced rates | 8% — takeaway food and non-alcoholic beverages (dining-in is taxed at 10%) and qualifying newspaper subscriptions |
| Accounting standard | Japanese GAAP (Corporate Accounting Principles); IFRS permitted for listed companies electing voluntary adoption |
| Currency | JPY (Japanese yen) |
| Employer social security | ~15.6% combined (health ~4.925% + welfare pension 9.15% + employment insurance 0.85% + child/childcare support 0.115%), plus 0.81% long-term care insurance for staff aged 40–64 (2026, Tokyo/Kyokai-kenpo) |
What makes it complex in Japan
- Layered 2026 tax changes — — the revised 10.3% national local corporate tax rate and a new 4% defence-capabilities surcharge both apply to fiscal years beginning on or after 1 April 2026, changing the effective rate mid-transition for non-calendar-year filers.
- Qualified Invoice System step-downs — — since October 2023, input tax credits require invoices from registered issuers; the transitional deduction rate for purchases from non-registered suppliers steps down again from 80% to 70% in October 2026.
What is the actual minimum capital to incorporate a company in Japan?
Legally, JPY 1 is sufficient to incorporate either a Kabushiki Kaisha (KK) or Godo Kaisha (GK) under the Companies Act. In practice, registration tax is calculated as 0.7% of capital with a minimum of JPY 150,000 for a KK and JPY 60,000 for a GK, and — separately — a foreign national who wants to manage the company under the Business Manager visa needs at least JPY 30 million in paid-in capital as of October 2025.
Layered 2026 tax changes 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.