Juridical Person Tax

Real Estate Acquisition Tax is a local tax imposed by prefectures and municipalities when acquiring, constructing, or expanding real estate.

Tax Amount = Assessed Value for Fixed Assets × 4% (Standard tax rate)

However, the following cases enjoy tax benefits in terms of tax rates and taxable standards:

• Land and residential buildings: 3% (until March 31, 2021), Non-residential buildings: 4%
• Special tax standards for residential land (Assessed value × 1/2) (until March 31, 2021)

Consumption Tax is a tax imposed on domestic transactions by taxpayers in Japan. It is levied on the transfer value of buildings and brokerage fees. However, it is not imposed on the transfer of land ownership or land use rights.

Tax Amount = Taxable Amount × 10% (2.2% of the 10% is local consumption tax)

The consumption tax rate in Japan was raised from 8% to 10% starting from October 1, 2019.

When constructing or purchasing land or buildings, it is necessary to register or transfer ownership. The tax incurred during this registration is called Registration and License Tax.

Tax Amount = Taxable Amount × Tax Rate (1.5% for land, 2.0% for buildings. The land tax rate applies until March 31, 2021, and will be changed to 2% from April 1, 2021 onwards.)

Stamp Duty is levied on the certificates prescribed by the Stamp Duty Act. The sale and purchase contracts of real estate, construction contracts for buildings, loan contracts, etc., are considered taxable certificates, and the tax amount is calculated based on the contract amount.

Tax Amount = 0 to 480,000 Japanese Yen

Business Income Tax is a tax levied on income (the amount obtained by subtracting necessary expenses from revenue) acquired by legal entities. In the case of leasing real estate, rental income should be combined with other income acquired by the legal entity for the calculation of Business Income Tax.

Tax Amount = Income Amount × 15% or 25.4%

• Local taxes are not imposed on foreign corporations engaged solely in real estate investment.
• Please refer to the explanation of local taxes for the actual tax burden rate for Japanese corporations.

Fixed Asset Tax and City Planning Tax are imposed on the real estate holders as of January 1 each year. These taxes are calculated based on the assessed value for fixed assets. The assessed value for fixed assets is reassessed every 3 years.

Fixed Asset Tax Amount = Taxable Amount × 1.4% (Standard tax rate)

City Planning Tax Amount = Taxable Amount × Up to 0.3% (Maximum tax rate)

• Corporate Enterprise Tax
• Local Corporate Special Tax
• Corporate Residence Tax

Local Taxes refer to the corporate taxes, including Corporate Enterprise Tax, Local Corporate Tax, and Local Municipal Tax, imposed by prefectures and municipalities on legal entities.

The actual tax burden rate, calculated in combination with the aforementioned Business Income Tax, is as follows: