Fixed asset tax on depreciable assets: as of January 1, standard rate 1.4%, tax-exempt threshold JPY 1.5 millionMachines and equipment owned by a company are also taxed every year
Fixed asset tax is a municipal tax charged to owners of land, buildings and depreciable assets. The assessment date is January 1 of the year in which the fiscal year begins, and the standard tax rate is 1.4%. The tax-exempt threshold for depreciable assets is JPY 1.5 million, set higher than JPY 300,000 for land and JPY 200,000 for buildings.
Key points
- The taxable objects are land, buildings and depreciable assets. The taxing authority is every municipality (the Tokyo metropolitan government for the 23 wards of Tokyo).
- For depreciable assets, the owner who filed a declaration is registered in the fixed asset tax ledger and taxed. For land and buildings, the owner is the one recorded in the registry.
- The tax base of depreciable assets is the acquisition cost, depreciated by the declining-balance method (old declining-balance method) according to the years elapsed.
- The standard tax rate is 1.4%. The tax-exempt thresholds are JPY 300,000 for land, JPY 200,000 for buildings, and JPY 1.5 million for depreciable assets (Ministry of Internal Affairs and Communications materials; data from fiscal 2021 / Reiwa 3).
- The assessment date is January 1 of the year in which the fiscal year begins.
What to do in practice
- Toward year-end, check newly acquired and disposed business assets against your fixed asset ledger, and sort out what you hold as of January 1.
- Because owners who file a declaration are registered in the ledger for depreciable assets, check the filing notice from the municipality where your business is located and file without omission.
Machines, tools and equipment that a company or shop uses for work are also charged a tax paid to the city or town, called "fixed asset tax." What matters is whether you own them on January 1 each year. There is a cutoff: if the total of the machines you own does not reach JPY 1.5 million, you do not have to pay.
- 1. January 1Machines and equipment you own on this day are covered
- 2. DeclarationThe owner declares to the city or town and is recorded in the ledger
- 3. CalculationThe value is multiplied by the 1.4% tax rate (tax-exempt threshold JPY 1.5 million)
Points
- If you own machines or equipment used for work, the city or town charges a tax every year.
- It is decided by whether you own them on January 1 of that year.
- If the total is up to JPY 1.5 million, this tax is not charged.
What the words mean
- Depreciable assets (shokyaku shisan)
- Things used for work, like machines and equipment, that lose value as you use them
- Tax-exempt threshold (menzeiten)
- A cutoff line: at or below this, the tax is not charged
- Ministry of Internal Affairs and Communications: Ministry of Internal Affairs and Communications: Local tax system - Overview of fixed asset tax
- Ministry of Internal Affairs and Communications: Ministry of Internal Affairs and Communications: Overview of fixed asset tax (document)
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.