Business establishment tax overview: asset-based portion is JPY 600 per sq. meter, employee-based portion is 0.25% of total payThe "business establishment tax" paid when you have a big shop or company in a big city
The business establishment tax is a local tax imposed on those who conduct business using offices and similar premises in cities with a population of 300,000 or more. The asset-based portion is JPY 600 per square meter of floor area, and the employee-based portion is 0.25% of total employee pay. The exemption thresholds are floor area of 1,000 square meters or less, and 100 or fewer employees.
Key points
- Taxing bodies are cities with a population of 300,000 or more (such as designated cities). Taxpayers are those who conduct business at establishments in the area.
- The asset-based portion is JPY 600 per square meter of establishment floor area. If the floor area is 1,000 sq. m or less, it is at or below the exemption threshold.
- The employee-based portion is 0.25% of total employee pay. If there are 100 or fewer employees, it is at or below the exemption threshold.
- The filing and payment deadline is within 2 months from the end of the business year for corporations, and by March 15 of the following year for individuals.
- Proceeds are used to develop and improve the urban environment, such as general facilities like roads, urban parks and parking lots, and water supply and sewerage.
What to do in practice
- Check whether your establishment is in a taxing city, and whether its floor area and number of employees exceed the exemption thresholds.
- If applicable, put the filing and payment within 2 months from the end of the business year on your schedule, together with the corporate tax return.
The business establishment tax is a tax paid by companies that have large offices or many employees in big cities with a population of 300,000 or more. It is used to build up the town, such as roads, parks and water supply. Small offices and companies with few people may not be covered.
- ○Applies: You do business in a city with a population of 300,000 or more
- ○Applies: Your establishment is larger than 1,000 sq. m (covered for the size-based part)
- ×Does not apply: Your establishment is only in towns with a population under 300,000
Points
- It applies to people doing business in big cities with a population of 300,000 or more.
- The tax is decided by the size of the office and the total pay given to employees.
- If the size is 1,000 sq. m or less, or there are 100 employees or fewer, you do not need to pay for that part.
What the words mean
- Business establishment (jigyosho)
- A place for work, such as an office or factory
- Exemption threshold
- A dividing line: at or below it, that tax is not charged
- Ministry of Internal Affairs and Communications: Ministry of Internal Affairs and Communications: Local tax system, Business Establishment Tax
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.