This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
New national tax arrears in fiscal 2025 (令和7年度) came to ¥993.5 billion. Of that, consumption tax accounted for ¥517.2 billion, more than half (52.1%). The figures come from the National Tax Agency (NTA) report on tax arrears published in August 2026[NTA, Overview of Tax Arrears in FY2025 (in Japanese)].
The best move, once you know you cannot pay, is to apply for a suspension of the sale of seized property (換価の猶予) before the payment deadline. If it is granted, you pay in instalments, and delinquency tax falls from 9.1% a year to 1.3% at the 2026 rates[Ministry of Finance, delinquency tax, interest tax and refund interest (in Japanese)]. This article sets out the arrears data, the path from a demand letter to seizure, and how to apply for a suspension.
The short answer: new arrears were flat at ¥993.5 billion, while the outstanding balance rose to ¥984.7 billion
| Item (FY2025) | Amount | Change from the previous year |
|---|---|---|
| Tax assessed (amount fixed by returns and assessments) | ¥89.7949 trillion | +10.6% |
| New arrears | ¥993.5 billion | +¥1.0 billion (+0.1%) |
| Share falling into arrears | 1.1% | About 98.9% paid on time |
| Arrears cleared (by payment, seizure and so on) | ¥980.2 billion | +¥31.5 billion (+3.3%) |
| Outstanding arrears at year end | ¥984.7 billion | +¥13.3 billion (+1.4%) |
| New consumption tax arrears | ¥517.2 billion | −2.4% (52.1% of new arrears) |
* NTA figures. Local consumption tax is excluded (new local consumption tax arrears were a further ¥145.8 billion). Year-on-year changes are calculated from the ratios in brackets in the report.
New arrears are about half the peak of FY1992 (¥1.8903 trillion). The balance is about 30% of its FY1998 peak (¥2.8149 trillion). But new arrears jumped 24.1% in FY2024, and they have stayed close to that level.
"Arrears" here means tax not paid by the deadline for which a demand letter has been issued. By the time the demand letter arrives, you are already in these statistics.
What goes unpaid? Over half of new arrears are consumption tax, and its balance matches income tax
New arrears are largest for consumption tax, then self-assessed income tax, then corporation tax. By outstanding balance, consumption tax and self-assessed income tax are almost the same size.
| Tax | New arrears | Change | Outstanding at year end | Change |
|---|---|---|---|---|
| Consumption tax | ¥517.2 billion | −2.4% | ¥389.3 billion | −1.6% |
| Self-assessed income tax | ¥214.6 billion | +10.8% | ¥284.5 billion | +5.1% |
| Corporation tax | ¥145.6 billion | −10.5% | ¥138.0 billion | +4.7% |
| Inheritance tax | ¥61.3 billion | +24.8% | ¥50.6 billion | +1.5% |
| Withheld income tax | ¥39.7 billion | −2.2% | ¥110.4 billion | −2.3% |
| Other | ¥15.2 billion | −8.5% | ¥12.0 billion | +14.2% |
| Total | ¥993.5 billion | +0.1% | ¥984.7 billion | +1.4% |
* NTA report, p.7, "Tax arrears by main tax". Income tax combined (withheld plus self-assessed) is ¥254.3 billion new and ¥394.8 billion outstanding. Totals may not add up because of rounding.
- Consumption tax: about 1.9% of the ¥26.5657 trillion assessed fell into arrears (this site's estimate).
- Self-assessed income tax: new arrears rose by about 10%. Most come from the tax returns of sole proprietors and freelancers.
- Inheritance tax: new arrears rose by about 25%. This tends to happen when an estate has little cash and a lot of real estate.
- Withheld income tax: tax that companies deduct from pay and hand over. New arrears are small, but the balance is large at ¥110.4 billion, so it takes time to clear.
New arrears are up about 1.4 times in three years, and the FY2024 jump has held
Lining up new arrears from FY2022 to FY2025 shows a sharp rise in FY2024. FY2025 stayed flat at that higher level.
| Fiscal year | All taxes | Consumption tax | Corporation tax |
|---|---|---|---|
| FY2022 (令和4年度) | ¥719.6 billion | ¥363.0 billion | ¥95.6 billion |
| FY2023 (令和5年度) | ¥799.7 billion | ¥438.3 billion | ¥100.1 billion |
| FY2024 (令和6年度) | ¥992.5 billion | ¥529.8 billion | ¥162.7 billion |
| FY2025 (令和7年度) | ¥993.5 billion | ¥517.2 billion | ¥145.6 billion |
* Compiled by this site from p.7 of the NTA reports for FY2023, FY2024 and FY2025.
Compared with FY2022, total new arrears are about 1.38 times higher and consumption tax about 1.42 times. Part of this reflects higher prices, which push up sales and tax bills. The share falling into arrears is 1.1%, which the NTA describes as "remaining low". National tax revenue trends are on our tax revenue data page.
Why is consumption tax so often unpaid? Money held for the state melts into working capital
Businesses collect consumption tax along with their sales and pay it over later in one go. The NTA itself explains that the tax "does not ask businesses to bear the burden"[NTA Tax Answer No.6101 (in Japanese)]. In the bank account, though, it is mixed in with the sales.
- Payment comes once a year. Sole proprietors must file by 31 March of the following year, so a whole year's tax goes out at once.
- Tax is due even at a loss. Unlike income or corporation tax, it depends on sales minus purchases, not profit. Wages do not count as purchases, so labour-heavy businesses feel it most.
- Collected tax gets spent on stock or wages. When cash is short, the consumption tax sitting in the account is often the first money used.
- Some businesses are newly taxable. With the invoice system that began in October 2023, many small businesses that had been exempt registered. The report does not break down the causes, but the timing matches the rise in new consumption tax arrears.
The 20% special rule that eased the burden for registered sole proprietors ends with tax year 2026. How to choose after that is covered in the end of the invoice 20% special rule.
Seizure becomes possible 10 days after a demand letter, and only a suspension application stops it
Delinquency tax starts the day after the deadline. Ten days after a demand letter is issued, your property can legally be seized.
- Delinquency tax starts the day after the deadline. The rate is 2.8% a year for the first two months and 9.1% after that (2026 rates)[NTA Tax Answer No.9205 (in Japanese)].
- A demand letter arrives within 50 days of the deadline. This is set by Article 37 of the Act on General Rules for National Taxes. At this point the tax counts as "arrears" in the statistics.
- Seizure is possible once 10 days have passed since the demand letter was issued. Bank deposits, receivables, wages and real estate can all be seized[NTA basic circular on the National Tax Collection Act, Article 47 (in Japanese)].
- Reminders by phone and letter follow. In one year the NTA's payment call centres phoned 1,148,000 taxpayers; 72.2% paid in full and 10.1% agreed to pay.
- Seized property is sold at public auction. The proceeds go to the unpaid tax.
In practice, not every case moves straight to seizure after a demand. According to the NTA, about two thirds of new arrears are cleared within the same fiscal year. But if you ignore contact, seizure is only a matter of time.
How much delinquency tax differs between ignoring it and getting a suspension: ¥600,000 of consumption tax
For the same amount unpaid for the same period, a suspension cuts delinquency tax to about one sixth.
Ignored: ¥600,000 × 2.8% × 61/365 + ¥600,000 × 9.1% × 214/365 = about ¥34,800
Suspended: ¥600,000 × 1.3% × 275/365 = about ¥5,800
The difference is about ¥29,000. During a suspension you pay monthly, so the balance falls and the real delinquency tax is even lower. Delinquency tax is rounded down to the nearest ¥100 (this site's rough estimate).
The rate during a suspension is called the special base rate for suspensions (猶予特例基準割合), and it is 1.3% a year in 2026 (0.9% in 2025)[Ministry of Finance (in Japanese)]. For a payment extension (納税の猶予) granted because of a disaster or illness, delinquency tax is waived in full. Delinquency tax applies only to the main tax, not to penalty taxes.
If you miss the filing deadline itself, a penalty for failure to file is added. What happens when a direct debit fails for lack of funds is explained in direct debit dates and insufficient balances.
If you cannot pay: suspension of sale or payment extension, depending on the reason
If the problem is simply cash flow, choose the suspension of sale. If the reason is a disaster, illness or a large loss, choose the payment extension. Both normally run up to one year with monthly instalments[NTA Tax Answer No.9206 (in Japanese)].
| Suspension of sale (換価の猶予) | Payment extension (納税の猶予) | |
|---|---|---|
| When it applies | Paying at once would make it hard to keep the business or household going | Disaster or theft, illness or injury of you or your family, closing or suspending a business, a heavy loss and similar |
| Application deadline | Within 6 months of the payment deadline | Promptly once the reason arises (by the payment deadline if tax from over a year earlier is fixed by an amended return or similar) |
| Other conditions | A sincere intention to pay, and no other national tax in arrears | You cannot pay at once because of that event |
| Period | Normally up to 1 year (extendable to 2 years at most), paid monthly | |
| Delinquency tax | Reduced to 1.3% a year (2026) | Waived in full or reduced to 1.3% a year |
| Security | Normally required. Not needed for ¥1 million or less, for 3 months or less, or where there is no property that can serve as security | |
The steps are as follows. The forms are in the NTA's guide to applying for a suspension[NTA guide to suspension applications (in Japanese)].
- Call the collection section of your tax office. Tell them how much you cannot pay and how much you can pay each month.
- Prepare the application and a statement of assets and income. Above ¥1 million, this splits into an inventory of assets and a statement of income and expenses.
- Submit it by the payment deadline. Through e-Tax, you can file from a smartphone using the web version.
- Pay according to the instalment plan in the approval notice. The reduced delinquency tax applies from the date of application, not the date of approval.
If you apply after the deadline, delinquency tax is not reduced for the period from the day after the deadline to the day before your application[NTA FAQ on payment extensions, Q24 and Q31 (in Japanese)]. Even a profitable business can get a suspension if it meets the conditions.
When a suspension is refused or revoked: points to check before applying
A suspension is not granted just because you apply. In the cases below it may be refused, or revoked partway through.
More likely to be approved
- You applied by the payment deadline
- No other national tax is in arrears
- Your monthly amount is backed up (shown in the statement of income and expenses)
- You respond when the tax office contacts you
Where people stumble
- More than 6 months have passed since the deadline (no suspension of sale on application)
- Arrears from an earlier year remain
- You missed instalments (the suspension may be revoked or shortened)
- You hid assets or moved them into another name (grounds for criminal complaint)
- There is still room after the deadline. The head of the tax office may consider a suspension on his or her own authority.
- Delinquency tax does not fall to zero. Even with a suspension of sale, 1.3% a year still applies.
- Local taxes and social insurance have separate offices. Ask your municipality about resident and enterprise tax, and the Japan Pension Service about employees' pension premiums.
- It affects loan screening. With tax unpaid, you cannot get a tax certificate showing no unpaid tax. For the order of dealing with your bank, see tax arrears, a loss-making year and bank loans.
In FY2025 the NTA filed criminal complaints in 9 cases (14 people and companies) for hiding property to evade collection. It is hiding assets, not being unable to pay, that is treated harshly.
Avoiding arrears on next year's consumption tax: set it aside with prepayment and direct debit
The surest method is to move the consumption tax you collect into a separate place every month. The NTA's report itself recommends prepayment by direct payment (予納ダイレクト) for planned payment of consumption tax.
- Prepayment by direct payment. From the account registered with e-Tax, you can prepay a set amount on a set date, spread across the tax period[e-Tax FAQ (in Japanese)].
- Direct payment. After filing through e-Tax, the tax is debited from your account at once or on a date you choose, up to the deadline[e-Tax, direct payment (in Japanese)].
- Direct debit. The tax is debited automatically on the set transfer date. For individuals' consumption tax the debit is in late April, which slightly extends the period free of delinquency tax.
- Interim payments. If last year's consumption tax was over ¥480,000, you pay in parts during the year. See the number and timing of consumption tax interim payments.
You can also pay by credit card or smartphone payment app. Fees are compared in cashless tax payment.
Summary
- New national tax arrears for Reiwa 7 (FY2025) held flat at ¥993.5 billion; consumption tax accounted for more than half, at ¥517.2 billion.
- Ten days after a demand notice (tokusoku-jo) is sent, the tax office can legally seize assets. Don't leave it unaddressed — contact the collection section at your tax office.
- If you can't pay, apply for a "deferral of asset conversion" (kanka no yuyo) by the due date. This lowers the late-payment tax rate from 9.1% to 1.3% a year, with repayment over one year in principle.
- Example: paying ¥600,000 in consumption tax nine months late costs about ¥34,800 in late-payment tax if ignored, versus about ¥5,800 with the deferral.
- Set aside next year's consumption tax in advance, using direct-debit prepayment or monthly set-asides.
References (sources)
- NTA, Overview of Tax Arrears in FY2025 (August 2026) (in Japanese) - new arrears, breakdown by tax, payment call centres, criminal complaints
- NTA, Overview of Tax Arrears in FY2024 and FY2023 (in Japanese) - for the trend
- NTA Tax Answer No.9205, delinquency tax and delinquency tax rates (in Japanese)
- Ministry of Finance, delinquency tax, interest tax and refund interest (in Japanese) - the 1.3% rate during a suspension
- NTA Tax Answer No.9206, when you cannot pay national tax on time (in Japanese)
- NTA guide to suspension applications and FAQ on payment extensions (in Japanese)
- NTA basic circular on the National Tax Collection Act, Article 47 (conditions for seizure) and Act on General Rules for National Taxes (in Japanese) - Article 37 (demand)
- NTA Tax Answer No.6101, how consumption tax works (in Japanese)
- e-Tax, direct payment and prepayment using direct payment (in Japanese)
* Year-on-year changes, shares and the delinquency tax estimate are this site's rough calculations based on NTA and Ministry of Finance materials. This article is general information. For individual decisions, check with the collection section of your tax office, a licensed tax accountant or another professional.
