Corporate Tax Return Guide
A complete walkthrough of what a company must do every year, from financial closing to filing and payment.
From filing deadlines, required documents and the e-filing procedure for corporate tax, corporate residence tax and enterprise tax, all the way to interim returns — we have gathered in one place the procedures that small and medium-sized companies and one-person company owners need to know.
What is a corporate tax return?
How it differs from an individual's return, and the types of tax you file.
BasicsFiling deadline and where to file
As a rule, within 2 months of the closing date. Extensions and interim returns explained.
DeadlineTypes of tax you file
The calculation and filing office for corporate tax, residence tax and enterprise tax.
TaxesRequired documents and forms
The structure of the appended schedules, breakdown-by-account statements and other documents to submit.
PreparationFiling procedure (step by step)
The flow from closing adjustments to preparing the return, filing and payment.
StepsHow to e-file (e-Tax)
E-filing is mandatory for companies. The procedure and systems explained.
e-TaxInterim returns and prepaid tax
How the mid-year advance-payment return works.
InterimCommon mistakes and how to fix them
Penalties for missed deadlines, amended returns and non-filing, and how to prevent them.
CautionWhat is a corporate tax return?
A corporate tax return is the procedure by which a company calculates its income for the business year (one year) and self-assesses and pays corporate tax, corporate residence tax and corporate enterprise tax separately. Unlike an individual's return, the filing deadline is within 2 months of the closing date, so it differs from company to company.
Within 2 months from the day after the closing date
(extendable by up to 1 month with an application)
Tax office (corporate tax)
Prefecture and municipality (residence tax and enterprise tax)
Companies with stated capital over ¥100 million must e-file
E-filing is strongly recommended for SMEs too
Corporate tax + corporate residence tax
+ corporate enterprise tax (+ consumption tax)
Main differences from an individual's tax return
| Item compared | Corporate tax return | Individual tax return |
|---|---|---|
| Filing deadline | Within 2 months of the closing date (varies by company) | Fixed at March 15 every year |
| Taxes filed | Corporate tax, residence tax, enterprise tax (filed separately) | Income tax (filed as one) |
| E-filing | Mandatory if stated capital exceeds ¥100 million (recommended for SMEs) | Optional (e-Tax increases the deduction) |
| Type of return | Schedule 1 through many, plus breakdown-by-account statements, etc. | Return form (Table 1, Table 2, etc.) |
| Interim return | Required if the prior-year tax exceeded ¥100,000 | Prepaid tax if the prior-year tax was ¥150,000 or more |
| Carryforward of losses | Can be carried forward for 10 years | 3 years (blue-return filers only) |
(profit and loss statement)
(non-deductible items, taxable income add-backs, etc.)
(income amount)
(15% / 23.2%)
※ In addition to corporate tax, residence tax (based on the corporate tax amount), enterprise tax (based on income) and consumption tax (separately) apply.
All corporations — stock companies, godo kaisha (LLCs), NPOs, general incorporated associations and so on — must file a tax return even when in the red (running a loss). If you do not file, you lose the ability to use carried-forward losses, and additional tax and delinquent tax are imposed.
Filing deadline and where to file
A company's filing deadline is within 2 months from the day after the last day of the business year (the closing date). For a company with a March closing, the deadline is the end of May; for a December closing, the end of February.
Filing and payment deadlines by closing month
(most common)
May 31
August 31
November 30
February 28 of the next year
Where to file and the types of return
File with the tax office that has jurisdiction over your place of tax payment (head office location). E-filing via e-Tax is recommended (mandatory if stated capital exceeds ¥100 million).
File with the prefectural tax office where your head office is located. You can e-file via eLTAX.
File with the municipal office where your place of business is located. You can file it all together via eLTAX (transmitted at the same time as the prefectural tax).
If there are unavoidable circumstances (for example, the closing is not finished in time), you can extend the deadline by one month by applying for the "Special provision for extension of the filing deadline." However, the payment deadline is not extended, so you must make an "estimated payment" of the expected tax amount within the deadline. Complete the procedure early to avoid delinquent tax.
Types of tax you file
In a corporate filing, you file several taxes on separate documents. The three basic ones are corporate tax (national), corporate residence tax and corporate enterprise tax (local), plus a consumption tax return is required separately.
The basic tax paid to the national government. Levied on taxable income (roughly profit). For SMEs, a reduced rate of 15% applies to the portion up to ¥8 million per year.
Split into prefectural resident tax and municipal resident tax. It has a "corporate-tax levy" calculated from the corporate tax amount, and a "per-capita levy" determined by stated capital and headcount (charged even at a loss).
A tax paid to the prefecture where you do business. Levied on the income amount (income levy). A special corporate enterprise tax is added on as a national tax (formally a national tax but collected by the prefecture).
A filing and payment obligation arises if taxable sales in the base period two business years earlier exceeded ¥10 million. Prepare a separate return from corporate tax. The first 2 years after incorporation are, as a rule, tax-exempt.
Breakdown of the effective tax rate (SME, taxable income of ¥8 million)
| Type of tax | Rate / calculation base | Tax amount (approx.) |
|---|---|---|
| Corporate tax (¥8 million × 15%) | 15% | ¥1,200,000 |
| Corporate residence tax, corporate-tax levy (1,200,000 × 17.3%) | Corporate tax amount × 17.3% | ¥207,600 |
| Corporate residence tax, per-capita levy | Fixed (by capital and headcount) | ¥70,000 |
| Corporate enterprise tax (¥8 million × 3.5–5.3%) | 3.5–5.3% | Approx. ¥308,000 |
| Special corporate enterprise tax (37% of enterprise tax) | Enterprise tax × 37% | Approx. ¥113,960 |
| Total tax burden | Approx. ¥1,899,560 | |
| Effective tax rate | Approx. 23.7% | |
※ A rough estimate at the standard rate for Tokyo. It varies by region, industry and company size.
※ Accounting profit and taxable income do not match. Taxable income is calculated after adjustments for non-deductible items (excess entertainment expenses, director bonuses, etc.) and deductible items (carried-forward losses, etc.).
Required documents and forms
A corporate tax return is more complex than an individual's, and it is made up of several documents called appended schedules (beppyo). If you use tax-accountant software or filing software, they can be generated automatically.
Main structure of the corporate tax return
A summary of the corporate tax calculation. This is the document equivalent to the cover of the return, aggregating the figures from each schedule to calculate the final tax due.
Determination of a family company. Always attached by owner-run companies.
Income calculation. Derives taxable income by making tax adjustments to accounting profit (the most important schedule).
Details of retained earnings and stated capital. Carried-forward losses are also entered here.
Details of unpaid corporate tax, residence tax and enterprise tax.
Credit for income tax (credit for tax withheld at source).
Details of the deduction for carried-forward losses. Needed if you have losses to carry forward.
Details of the depreciation calculation. Needed if you have fixed assets.
Entertainment expenses (Schedule 15), donations (Schedule 14), tax credits (the various Schedule 6 items) and so on, added as the situation requires.
Attachment checklist
Output from accounting software. Must be attached to the corporate tax return (XBRL or PDF format for e-filing).
Lists the breakdown of accounts receivable, accounts payable, borrowings, director compensation and so on. Some accounts can have attachment waived in e-filing.
A roughly one-page A4 document describing the industry, business content, officer composition and major events during the period.
Check whether the application for approval of blue-return status, the notification of the inventory valuation method, the notification of the depreciation method and so on have been submitted within the deadlines.
Attachment is required when applying special taxation measures such as the SME investment promotion tax scheme or the R&D tax scheme.
A separate return from corporate tax. The form differs depending on whether you use the standard method or the simplified method. File it within the same deadline.
E-file via eLTAX (the local tax portal). Filing it at the same time as corporate tax is efficient.
By choosing blue-return status, a company too can receive benefits such as the 10-year carryforward of losses and the loss carryback refund. Submit it to the tax office within 3 months of incorporation (or by the day before the earlier of the end of the first business year). Almost all companies today use blue-return filing.
Filing procedure (step by step)
A corporate tax return proceeds in the order of closing adjustments → preparing the return → filing → payment. The 2-month deadline from the closing date is surprisingly short, so it is important to start preparing before the closing month begins.
Enter sales, purchases and expenses into accounting software (Kanjo Bugyo, freee, Money Forward, etc.) as they occur. Using automatic import of bank and card statements is efficient.
As the closing date approaches, estimate where profit will land and check the room for tax saving. Because most measures cannot be done once the closing date has passed, acting early is important.
Accurately record expenses that have arisen but are unpaid as of the closing date (advisory fees, salaries, outsourcing costs, etc.).
Use the blue-return small-amount depreciation special provision (under ¥300,000 each, up to ¥3 million total per year) to expense items within the current period.
Record accounts receivable with no prospect of collection as bad-debt losses, and inventory that has dropped in value as valuation losses, treating them as expenses.
Bring forward repairs or supply purchases planned for the next period into the current period and expense them. Actual use is required.
Once the closing date has passed, close the books, make the closing adjustment entries and prepare the financial statements.
Calculate depreciation based on the fixed-asset ledger. Be careful about the choice between the straight-line and declining-balance methods.
Take a physical count of the period-end inventory and finalize the valuation using the cost method or the lower-of-cost-or-market method.
Calculation is required if you apply tax-effect accounting (for listed companies or those subject to an audit).
Check all journal entries and finalize the BS and P&L. These become the basis for the tax return.
Once the financial statements are final, prepare the return (schedules). Use tax-accountant software or the National Tax Agency's "e-filing-compatible software for corporate tax."
Derive taxable income by adding adjustments for non-deductible items, taxable income add-backs, deductible items and non-taxable revenue to the accounting profit. The adjustments center on director bonuses, excess entertainment expenses, donations and the like.
Check that the opening figures on Schedule 5 (1) match the prior period-end, and that carried-forward losses have been carried over correctly.
Once the corporate tax figures are final, prepare the residence tax (corporate-tax levy) and enterprise tax returns. Transmit via eLTAX.
Once the return is complete, e-file via e-Tax (corporate tax) and eLTAX (local tax). Make the payment at the same time.
- Mandatory if stated capital exceeds ¥100 million. Strongly recommended for SMEs too
- Transmit schedules and financial statements in XBRL format
- You can verify with the "error-check feature" before transmitting
- A receipt notice (receipt number) is issued the same day
- E-file prefectural and municipal taxes all together
- Software linked with e-Tax can transmit them in one batch
- You must register as an eLTAX user in advance
- SMEs may also file on paper (postmark counts)
- Get the tax office's receipt stamp on your copy
- Takes more time and cost than e-Tax
- Direct payment (account transfer) from e-Tax is convenient
- Convenience-store payment, credit card and Pay services are also available
- You can also pay at a financial institution's counter
- Direct payment from eLTAX
- Transfer to the account designated by the prefecture or municipality
- Reminders for the per-capita levy may arrive even before filing
How to e-file (e-Tax)
For corporate e-filing, it is common to use tax-accountant software (TKC, MJS, Yayoi, etc.) or direct-type software. If you file on your own, you can also use the National Tax Agency's "e-Tax software (web version)."
Preparing to use e-Tax
Obtain an electronic certificate based on the commercial registration (Ministry of Justice). It must be renewed within its validity period (1–3 years). You can also file with the representative's personal My Number card.
Register as a user of e-Tax (the national tax electronic filing and payment system) and obtain a user identification number (16 digits). Once obtained, you can reuse it every year.
For local tax e-filing, register as a user via the "PCdesk system" or the eLTAX portal. This registration is separate from e-Tax.
Check whether your accounting software supports outputting filing data (XBRL). Many accounting programs have a feature to transmit directly to e-Tax and eLTAX.
Options for how to file
| Filing method | Suited to | Rough cost | Effort |
|---|---|---|---|
| Hand it all to a tax accountant | Companies short on time or with a complex return | ¥10,000–30,000/month (retainer) + closing fee | ★☆☆ |
| File yourself via accounting-software linkage | One-person or small companies with simple transactions | Software cost only (from a few thousand yen/month) | ★★★ |
| File yourself with e-Tax software (web version) | Companies with simple transactions and filing experience | Free (e-Tax itself is free) | ★★★ |
| File on paper at the tax office | SMEs without an e-filing environment in place | Printing and mailing cost only | ★★☆ |
For the following companies, e-filing (filing via e-Tax) is a legal obligation.
- Companies with stated capital or contributed capital exceeding ¥100 million
- Mutual companies (insurance companies), investment corporations and special purpose companies
SMEs other than the above are not obligated, but both tax offices and local governments strongly recommend e-filing, and the move toward paperless filing is accelerating.
Interim returns and prepaid tax
A company whose business year exceeds 6 months and whose corporate tax for the prior business year exceeded ¥100,000 is obligated to file an "interim return" partway through the business year (within 2 months after 6 months have elapsed).
(within 2 months after 6 months elapse)
(settle the interim payment)
Two methods for the interim return
A method of paying half of the prior business year's corporate tax as an interim payment. The tax office sends an "interim return / payment slip," so you just pay that amount (you can omit submitting the return).
A method of actually doing a provisional closing for the first 6 months and filing and paying a tax that reflects the actual state. If the current period's performance is much lower than the prior year, this method can reduce the amount you pay.
| Prior-year corporate tax | Interim return obligation | Recommended method |
|---|---|---|
| ¥100,000 or less | No interim return obligation | None (final return only) |
| Over ¥100,000 | Interim return required | Estimated return if performance is about the same as last year |
| Performance sharply down from the prior year | Interim return required | Actual-amount return by provisional closing (reduces payment) |
Common mistakes and how to fix them
Here we gather common mistakes in corporate tax returns and how to deal with them. Understand them in advance to prevent penalties.
Non-filing of corporate tax draws an additional tax for non-filing (5–20%) and delinquent tax (2–14.6% per year). If you file voluntarily before a tax audit, the additional tax is reduced to 5%.
As soon as you notice, prepare and file the return. A return is required even at a loss (the per-capita levy applies, and the loss carryforward is lost). Filing within the deadline is essential to protect carried-forward losses.
To be deductible, director compensation must be "fixed regular salary" — decided and notified within 3 months of the start of the business year and paid in the same amount each month. Increasing or decreasing it mid-period makes the changed portion non-deductible and raises corporate tax.
Change the compensation within 3 months of the start of the next business year. If poor performance forces you to lower it during the current period, check with a tax accountant whether you meet the "marked deterioration of business condition" requirement.
A bonus to a director is, as a rule, non-deductible (not an expense). Paying it has no effect of lowering corporate tax, and only individual salary taxation arises.
If you want to pay a director a bonus, you can make it deductible by notifying the tax office of the payment date and amount in advance as "predetermined salary by advance notification." The notification deadline is within 1 month of the day duties begin or of the shareholders' meeting.
SMEs can fully deduct entertainment expenses up to ¥8 million per year, but the excess is non-deductible. If you mistakenly lump them together with meeting expenses (such as ¥5,000 or less per person), you may miss the deductible range.
Classify and tally entertainment expenses and meeting expenses appropriately. Meals over ¥5,000 per person are entertainment expenses; those below may be processable as meeting expenses (fully deductible). Keep notes of the number of participants and the amount.
Transcription errors between Schedules 4 and 5, errors in carrying over the prior period-end figures, mistakes in calculating carried-forward losses and the like undermine the reliability of the return and raise the risk of a tax audit.
Always check that the return is consistent with the prior period. If correction is needed, file an "amended return" (if the tax increases) or a "request for correction" (if the tax decreases). A request for correction can be filed within 5 years of the filing deadline.
If you miss the deadline for a notification that must be submitted after incorporation (application for approval of blue-return status, inventory valuation method, depreciation method, etc.), you can no longer receive favorable special provisions.
Submit the required documents to the tax office promptly after incorporation. In particular, the deadline for the blue-return approval application is within 3 months of incorporation (or by the earlier of the day before the end of the first business year).
Main notifications that must be submitted after incorporation
| Name of notification | Submission deadline | Where to submit | Importance |
|---|---|---|---|
| Corporate establishment notification | Within 2 months of incorporation | Tax office, prefecture, municipality | ★★★ |
| Blue-return approval application | Within 3 months of incorporation, or the day before the end of the first business year | Tax office | ★★★ |
| Notification of establishment of a salary-paying office | Within 1 month of starting salary payments | Tax office | ★★★ |
| Application for the special payment-period provision for withholding income tax | By the end of the month before the month you want the provision to apply | Tax office | ★★☆ |
| Notification of the inventory valuation method | By the deadline for the first final return | Tax office | ★★☆ |
| Notification of the depreciation method for depreciable assets | By the deadline for the first final return | Tax office | ★★☆ |
| Notification of choosing taxable-business status for consumption tax | By the end of the business year before the taxable period you want it to apply to | Tax office | ★☆☆ |
• New business year starts
• Fix and notify director compensation (within 3 months)
• Confirm the choice of consumption tax method
• 5/31 final corporate tax return and payment
• Consumption tax final return and payment
• Local tax (residence tax, enterprise tax) return and payment
• Ordinary accounting and bookkeeping
• Mid-period trial calculation and performance check
• Begin considering tax-saving measures
• 11/30 interim return and payment deadline
• Consumption tax interim return and payment
• Seriously consider year-end tax-saving measures
• Carry out pre-closing tax-saving measures
• Check accrued expenses and inventory
• Purchase equipment under ¥300,000
• 3/31 closing date
• Physical inventory count and fixed-asset check
• Final closing adjustment entries
Learn more in related columns and pages
Corporate Tax Guide
The big picture: corporate tax rates, director compensation, expenses, retirement pay and closing measures.
The optimal director compensation
How to think about the optimal pay combining corporate tax, income tax and social insurance.
When to incorporate
The income level to use as a guide when considering going from sole proprietor to company.
Invoices and tax-exempt businesses
The tax-exempt period at incorporation, the registration decision, and transitional measures.
FAQ
When is the corporate tax filing deadline?
As a rule, within 2 months from the day after the last day of the business year. If there are circumstances such as an audit, you can apply for the special provision to extend the filing deadline, but the tax must be paid within the deadline (watch out for interest tax).
Do I need to file corporate tax even at a loss?
Yes. The per-capita levy of corporate residence tax (at least about ¥70,000 a year) applies even at a loss. Also, filing is a prerequisite for carrying losses forward for up to 10 years.
Can I file myself without a tax accountant?
You can file on your own with e-Tax or accounting software, but preparing the corporate tax schedules is complex, with many points requiring judgment such as director compensation, depreciation and tax credits, so using a tax accountant is common.
Sources / official information
This article is based on the official information below. Rules may be revised; please check each official site for the latest details.
- National Tax Agency — Tax Answer No.5759 Special corporate tax rate for SMEs (in Japanese)
- National Tax Agency — Tax Answer No.5200 Director salaries (in Japanese)
- National Tax Agency — Filing corporate tax (preparing the returns) (in Japanese)
- e-Tax — Corporate e-filing (in Japanese)
- Ministry of Finance — Overview of corporate tax (in Japanese)
※ This article is for general information only and is not tax or legal advice. For individual tax matters, consult your local tax office or a licensed tax accountant (zeirishi).