The following analysis provides a focused overview of corporate income tax rates, surtaxes, and structural features for companies operating in Japan, based exclusively on the most current information available for 2025. This guide covers corporate tax brackets, associated local levies, and other critical details for compliance and strategic planning.
Corporate Tax Regime in Japan: 2025 Snapshot
Japan employs a progressive corporate tax system, meaning that tax rates vary depending on the level of corporate income. For 2025, the national corporate income tax applies directly to a company’s taxable income, which serves as the basis for calculating additional local and special surtaxes. Current data on surcharges and relevant income thresholds are illustrated below to support straightforward planning and evaluation.
Corporate Tax Rates by Income Bracket
| Taxable Income Bracket (JPY) | Rate (%) |
|---|---|
| ¥0 – ¥8,000,000 | 15% |
| Over ¥8,000,000 | 23.2% |
The above rates apply to the net income calculated under Japan’s corporate taxation rules. For international reference, as of March 2025, ¥1,000,000 equals approximately $6,900 USD (using an estimated exchange rate of ¥145 = $1). Always confirm up-to-date rates for precise calculations.
Additional Surtaxes and Local Levies
Japan’s fiscal environment also includes a series of surtaxes that are calculated either as a percentage of the corporate tax liability or on an income base. The table below summarizes the main surtaxes applicable in Tokyo for companies with paid-in capital of ¥100 million or less, and for income above ¥8 million:
| Surtax/Levy | Rate (%) | Basis/Condition |
|---|---|---|
| National Local Corporate Tax | 2.39% | 10.3% of corporate tax liability |
| Enterprise Tax | 7.48% | Income base (Tokyo, paid-in capital ≤ ¥100 million, income > ¥8 million) |
| Special Corporate Business Tax | 2.59% | Income base (Tokyo, paid-in capital ≤ ¥100 million, income > ¥8 million) |
| Inhabitants’ Tax | 2.413% | 10.4% of corporate tax liability (Tokyo, paid-in capital ≤ ¥100 million) |
| Special Corporation Tax to Strengthen Defence Capabilities | 0.928% | From April 1, 2026 — 4% of base corporate tax less ¥5 million deduction |
Where precise figures are required, these surtax rates must be applied to either the tax calculated or, in some cases, the underlying income base as specified. Not all surtaxes apply to every company; conditions like paid-in capital and geographic location (e.g., Tokyo) are specific triggers.
Key Features of Japan’s Corporate Taxation System
- Type of Tax: Corporate (progressive rate structure)
- Assessment Basis: Corporate taxable income as defined by Japanese law
- Currency: Japanese Yen (JPY)
- Brackets: 15% for income up to ¥8 million; 23.2% above ¥8 million
- Surtaxes: Multiple layers, generally dependent on taxable income, paid-in capital, and region
- Special Surcharges: Additional defence-related tax commencing April 2026
Current data for the standard income tax rates and local surcharges in 2025 are provided above. Where rates vary by prefecture or by company size, the most common (Tokyo, capital ≤ ¥100 million) conditions are referenced.
Pro Tips for Navigating Corporate Taxation in Japan
- Pay close attention to your company’s paid-in capital and operational base—these parameters determine eligibility for reduced rates and which surtaxes apply.
- Track annual changes in special surcharges, such as new defence-related levies effective April 2026, to anticipate and budget for evolving compliance costs.
- Separate your corporate tax liability calculations from your local and special surtaxes—Japan’s structure requires sequential, rather than simultaneous, computations for maximum accuracy.
- Consult the National Tax Agency of Japan for authoritative updates and official guidelines on registration, payment, and liability under the latest regime.
- Double-check the thresholds for income brackets and confirm against quarterly statements to ensure optimal application of the progressive tax structure.
Official Information Sources
For current laws, administrative practices, and direct support on Japan’s corporate income taxation, refer to the official National Tax Agency of Japan homepage.
In summary, Japan’s progressive corporate tax regime in 2025 features two primary income brackets (15% and 23.2%) with a comprehensive overlay of surtaxes set by local authorities and special levies for specific policy goals. The total effective rate for most companies—especially those with significant activity in Tokyo—reflects both the base corporate tax and an array of local charges. Each of these elements should be monitored as part of standard financial and compliance planning for entities operating or launching in Japan.