Filings After Incorporation in Japan: Tax, Pension and Employment

The answer

A kabushiki kaisha (株式会社, KK) or godo kaisha (合同会社, GK) comes into existence when it is registered (Companies Act, 会社法 Kaisha-hō, Arts. 49 and 579). It then files a notification of incorporation with the tax office within two months, and with the local tax offices as well. In Tokyo, the metropolitan tax office needs its notification within 15 days of starting business. A company also joins health insurance and employees' pension insurance through the pension office within five days. When it starts employing workers, it notifies the labour standards office and Hello Work within ten days. Blue-return approval, a salary-paying office notice and, for capital of JPY 10 million or more, a consumption tax notification are filed with the tax office too.

Online, the national notification of incorporation and the prefectural and municipal ones can be prepared and sent together.

The tax office

A newly incorporated company must file a notification with the tax office for its place of tax payment within two months of the date of incorporation. The notification states the place of tax payment, the business purposes and the date of incorporation, and a copy of the articles of incorporation and other documents set by ministerial ordinance are attached (Corporation Tax Act, 法人税法 Hōjinzei-hō, Art. 148(1)). The National Tax Agency publishes English guides to its forms on its guidelines page.

A company that wants to file its corporation tax returns on blue forms applies to the tax office for approval. For the business year in which the company is incorporated, the application is due by the day before whichever comes first: the day three months after incorporation, or the last day of that business year (Art. 122(1) and (2)(i)). According to JETRO's tax overview, a loss can be carried forward only if a blue form return is filed for the year in which the loss arose, and a final return is then filed in every later year. For losses from business years beginning on or after 1 April 2018, the carry-forward period is ten years.

Anyone who sets up an office in Japan that handles the payment of salaries must file a notification with the tax office within one month of setting it up (Income Tax Act, 所得税法 Shotokuzei-hō, Art. 230). Income tax withheld from salaries paid to residents is paid to the government by the 10th of the month after it is withheld (Art. 183(1)). An office where fewer than ten people regularly receive salaries can, with the tax office's approval, pay twice a year instead: by 10 July for January to June, and by 20 January of the next year for July to December (Art. 216).

The base period for consumption tax is the business year two years earlier (Consumption Tax Act, 消費税法 Shōhizei-hō, Art. 2(1)(xiv)), so a new company has none in its first business years, normally the first two. If its capital at the start of such a year is JPY 10 million or more, it is liable for consumption tax for that year (Art. 12-2(1)) and must promptly file a notification saying so with the tax office (Art. 57(2)). The same applies to a new company that is liable under the rule for subsidiaries of large groups (Arts. 12-3(1) and 57(2)).

The local tax offices

The prefecture and the city, town or village where the company has its office each have their own notification form. A company set up in Tokyo files a notification of incorporation with the metropolitan tax office for its area within 15 days of starting business (Tokyo Metropolitan Tax Ordinance, Art. 26(1)). For a company in Tokyo's 23 wards, the metropolitan government also handles the municipal part of the corporate inhabitant tax, as its Bureau of Taxation explains, so the metropolitan tax office is the only local office.

The pension office

An office of a company that regularly employs people is covered by health insurance and employees' pension insurance (Health Insurance Act, 健康保険法 Kenkō Hoken-hō, Art. 3(3)(ii); Employees' Pension Insurance Act, 厚生年金保険法 Kōsei Nenkin Hoken-hō, Art. 6(1)(ii)). All incorporated companies take part, and their presidents and representative directors are covered, according to JETRO's overview of social security.

The employer files a notification with the Japan Pension Service within five days of the office first becoming covered (Employees' Pension Insurance Act Enforcement Regulation, Art. 13(1); Health Insurance Act Enforcement Regulation, Art. 19(1)). The two are made on one form (Employees' Pension Insurance Act Enforcement Regulation, Art. 13(3)).

The labour standards office and Hello Work

Workers' accident compensation insurance covers a business that employs workers (Industrial Accident Compensation Insurance Act, 労働者災害補償保険法, Art. 3(1)), and the insurance relationship arises on the day the business starts (Labour Insurance Premium Collection Act, 労働保険の保険料の徴収等に関する法律, Art. 3). The employer notifies the government within ten days of that day (Art. 4-2(1)). The notice goes to the local Labour Standards Inspection Office, according to JETRO. A company that has no workers yet has neither this filing nor the employment insurance ones below.

Employment insurance covers a business in which workers are employed (Employment Insurance Act, 雇用保険法 Koyō Hoken-hō, Art. 5(1)). The employer files a notice of setting up an establishment with the local Public Employment Security Office (公共職業安定所, known as Hello Work) within ten days counting from the day after it is set up (Employment Insurance Act Enforcement Regulation, Art. 141(1)). For each employee who becomes insured, a notice is due by the 10th of the following month (Art. 6(1)).

For an office whose health insurance is run by the Japan Health Insurance Association (全国健康保険協会 Zenkoku Kenkō Hoken Kyōkai), the pension office notification can be submitted through the Labour Standards Inspection Office or the Public Employment Security Office when it is filed together with the labour insurance notice or the employment insurance establishment notice. When it is filed with the labour insurance notice, this does not apply to some businesses, such as a business with a fixed term (Health Insurance Act Enforcement Regulation, Art. 19(2); Employees' Pension Insurance Act Enforcement Regulation, Art. 13(3)).

Filing together online

The National Tax Agency's e-Tax software (web version) lets a company prepare the national notification of incorporation together with the prefectural and municipal notifications and send them at once. The local forms reach the offices the company selects through eLTAX. Sending needs an electronic signature and works only from a computer.

The one-stop service for incorporation on Myna Portal covers the national and local tax notifications and employment-related filings with the pension office and Hello Work, and since February 2021 notary certification of the articles and registration. It requires the company's representative to use their own My Number Card (マイナンバーカード).

The first tax return

A company files its corporation tax return within two months after the end of each business year (Corporation Tax Act, Art. 74(1)). As JETRO notes, the filing deadline can be extended with the tax office's approval in limited cases, such as when the articles of incorporation mean the annual shareholders' meeting is not called within those two months, but the payment deadline is not extended.

References

• National Tax Agency, Guidelines for Notification of Corporation Establishment, etc.
• JETRO, Section 3. Taxes in Japan: 3.3 Overview of Corporate Income Taxes.
• JETRO, Section 4. 4.9 Japan's social security system.
• National Tax Agency, e-Tax, 法人設立及び異動手続の申請・届出について (Japanese).
• National Tax Agency, 法人設立ワンストップサービスの対象が全ての手続に拡大されました (Japanese); 法人設立ワンストップサービス よくある質問 (Japanese).
• Tokyo Metropolitan Government Bureau of Taxation, よくある質問 都税に関すること 法人事業税・法人都民税 (Japanese).
• Companies Act (Act No. 86 of 2005), Arts. 49 and 579; Corporation Tax Act (Act No. 34 of 1965), Arts. 74, 122 and 148; Income Tax Act (Act No. 33 of 1965), Arts. 183, 216 and 230; Consumption Tax Act (Act No. 108 of 1988), Arts. 2, 12-2, 12-3 and 57; Health Insurance Act (Act No. 70 of 1922), Arts. 3 and 5, and its Enforcement Regulation, Art. 19; Employees' Pension Insurance Act (Act No. 115 of 1954), Art. 6, and its Enforcement Regulation, Art. 13; Industrial Accident Compensation Insurance Act (Act No. 50 of 1947), Art. 3; Labour Insurance Premium Collection Act (Act No. 84 of 1969), Arts. 3 and 4-2; Employment Insurance Act (Act No. 116 of 1974), Art. 5, and its Enforcement Regulation, Arts. 6 and 141 (e-Gov, Japanese).

This article is for general information only and is not legal or tax advice.

For the consumption tax line and how it interacts with capital, see how much capital you need. You can also see how our fixed-fee company incorporation works.