Starting a business in
🇯🇵Japan
Checked November 4, 2026 · How we score
Corporate tax
29.74%
Top income tax
55.9%
Setup from
$3,000
all-in, first year
Time to form
21 days
visit usually needed
Taxes in Japan
| Corporate income tax | 29.74% Effective statutory rate of about 29.74% for large companies in Tokyo (national 23.2% plus local corporate, enterprise and inhabitant taxes). Small companies (capital of JPY 100m or less) pay a reduced 15% national rate on the first JPY 8m of income, for an effective rate of about 21-34% depending on profit and location. Japan has applied a 15% top-up tax regime for large multinationals since fiscal years beginning April 2024. |
|---|---|
| Personal income tax (top) | 55.9% National income tax up to 45% plus 10% inhabitant tax plus a 2.1% reconstruction surtax on national income tax, for a top combined rate of about 55.9% on income above JPY 40m. Permanent residents are taxed on worldwide income; non-permanent residents (under 5 of the last 10 years) are taxed on Japan-source income and foreign income remitted to Japan. |
| Tax system | Worldwide income |
| Capital gains tax | 20.32%20.315% flat (15% income tax, 5% inhabitant tax, 0.315% reconstruction surtax) on gains from listed shares and most financial assets. Gains from real estate and from sale of business assets follow different rates. |
| Dividend withholding (non-residents) | 20.42% |
| VAT / GST | 10% |
| Social security | Health insurance and pension contributions total roughly 15% each for employer and employee for salaried staff, with caps; the consumption tax rate is 10% (8% on food and newspapers). |
Forming a company in Japan
| Usual entity | Kabushiki Kaisha (KK) or Godo Kaisha (GK) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $3,000–$8,000 |
| Annual running cost | $4,000–$10k |
| Time to incorporate | 21 days |
| Form remotely as a foreigner | No |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | No |
| Statutory audit for small companies | No |
| Business banking for non-residents | Hard |
Residency and visas
The digital nomad visa (since April 2024) allows stays of up to 6 months for citizens of 49 designated countries earning at least JPY 10 million a year, and it cannot be renewed. Founders usually use the Business Manager visa, which since October 2025 requires JPY 30 million in capital (up from JPY 5m), at least one full-time employee and business experience or qualifications, plus Japanese-language ability. A start-up visa for entrepreneurs is available in designated cities.
| Digital nomad visa | Designated Activities (Digital Nomad) visa, $5,400/month income |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 4/5 (1 = easiest) |
Special tax regimes
Business Manager visa
Main route for foreign entrepreneurs to run a Japanese company; tightened in October 2025 to require JPY 30 million in capital, a physical office, full-time staff and experience or Japanese-language ability.
Digital nomad visa (6 months)
Non-renewable 6-month stay with JPY 10m minimum income and private health insurance; no residence card and no tax benefits.
Small and medium enterprise rate
A reduced 15% national rate on the first JPY 8m of income for companies with capital of JPY 100m or less.
Pros and cons
Why founders pick Japan
- Third-largest economy with a stable, rule-based system
- Excellent reputation with banks and customers
- Reduced rates for small companies
- Strong protection of intellectual property
Watch out for
- High combined corporate and personal tax rates
- Business Manager visa now requires JPY 30m in capital
- Language and local seal (hanko) requirements make remote setup hard
- Complex social insurance and consumption tax compliance
Best for: Companies targeting the Japanese market · Founders who want a highly credible base in Asia and can meet visa requirements · Gaming, hardware and enterprise software businesses
Japan: common questions
What is the corporate tax rate in Japan?
The effective combined rate is about 29.74% for large companies in Tokyo. Small companies with capital of JPY 100m or less pay a reduced 15% national rate on the first JPY 8m of income, so effective rates for them range from roughly 21% to 34%.
How much capital do you need for the Japan Business Manager visa?
Since 16 October 2025 the Business Manager visa has required at least JPY 30 million in capital, up from JPY 5 million, along with a physical office and typically at least one full-time employee. Check Immigration Services Agency guidance for details on language and experience rules.
Does Japan have a digital nomad visa?
Yes. Since April 2024 citizens of designated countries earning at least JPY 10 million a year can stay for up to 6 months on a Designated Activities visa. It cannot be extended or converted easily and does not provide a residence card.
Is Japan a tax haven?
No. Japan has high corporate and personal tax rates and taxes residents on worldwide income. Non-permanent residents get relief on foreign income not remitted to Japan for their first five years.
Can a foreigner start a company in Japan remotely?
Technically a foreign shareholder can be the owner, but you still need a Japanese office address, seals and registration steps, and practically a bank account that usually requires an in-person visit. Founders therefore usually relocate or use a local legal agent.
Sources
- National Tax Agency (Japan)
- Immigration Services Agency of Japan
- JETRO - Setting up a business in Japan
- PwC Tax Summaries - Japan
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Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.