FAQ

All businesses in Japan are required to keep accounting records for Japanese tax purposes. This includes financial documents that show your business transactions, such as invoices, receipts, bank statements, financial statements, agreements and so on.

Businesses operating in Japan are subject to inspection by the tax office. Therefore, all accounting records must be retained as they can be used for your protection should there be any question or challenge.

As of January 2024, all financial records must be kept digitally under the Electronic Books Maintenance Act. Previously, paper financial records such as receipts and invoices were considered original evidence. These have now been replaced by digital data and are treated as originals.

A financial statement is a statement of the financial position of your company. It includes a balance sheet and a profit and loss account.

The main purpose of the financial statements is to enable management to analyse how the business is performing and to make the right strategic decisions.

The financial statements are also used to calculate taxes and are submitted with the annual tax return.

Therefore, they are one of the most crucial financial records that all businesses must prepare and maintain.

An accounting standard is a set of practices and policies used to prepare financial statements. In Japan, Japanese Generally Accepted Accounting Principles (GAAP) are used.

However, this creates a problem for overseas based companies. When it comes to group consolidation, Japanese GAAP financial statements cannot be combined with those of the parent company. Therefore, Japanese GAAP financial statements need to be converted using international accounting standards (IFRS).

No worries, we've got you covered. With a solid IFRS background, JPUK Accounting solutions can prepare financial statements in both accounting standards.

From 1 April to 31 March. The Japanese academic year is also aligned.

At the time of incorporation, companies can choose their own financial year. The corporation tax return must be filed within two months of its year-end.

The new invoicing system was implemented on 1 October 2023. It applies to all businesses in Japan.

Invoices are issued when businesses sell goods and services. Each item of goods and services is subject to consumption tax.

In Japan, different rates of consumption tax (mostly 10%, 8%, exemption) apply depending on the goods and services sold.

The new invoicing system sets out rules for the layout of invoices so that the appropriate tax rate is applied to goods and services.

Any errors on invoices could result in your customers being charged the wrong amount. This could affect the credibility of your business.

Conversely, if there is an error in the supplier's invoice, you may end up paying the wrong amount for the goods and services you have purchased.

JPUK Accounting Solutions can help to ensure that invoices are prepared correctly.

At the time of incorporation, companies must notify the relevant government agencies. They then become liable for taxes and social insurance contributions.

Employees will see the following deductions on their payslips each month:

1. Income tax

This is deducted from the salary. The company is required to pay these deductions to the tax office by the set date.

2. Resident tax

The local authority in which the employee resides calculates the annual resident tax and sends the information to the company. The company will then deduct the tax from the employee's salary accordingly. This will be paid to the local authority by the set date.

3. Social insurance contributions 

These include health insurance and pension. Employers pay 50% of each contribution and employees pay the remaining 50%. The company will need to pay the total contribution to each relevant authority by the set date.

Part-time employees working less than 20 hours per week are exempt from these contributions.

4. Other contributions

Companies also become liable for labour insurance and workers' compensation insurance when certain conditions are met.