The tax agent, or the fiscal representative in Japan, is an appointed Japanese resident company or individual who acts on behalf of a taxpayer who needs to make the mandatory tax filing with the Japanese National Tax Agency.
For investors interested in setting up a company in Japan, complete tax and reporting compliance is a mandatory issue, therefore, many will also be interested in appointing a third party who can handle the essential registration with the authorities, and make the necessary submissions.
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How the fiscal representative in Japan assists companies
The role of the fiscal representative is an essential one in that it allows companies to ensure that they remain fully tax compliant throughout their business activities in Japan.
It can be common for companies to appoint such an agent, however, foreign individuals who are liable for tax in the country and who will not be able to deal with the mandatory submissions themselves can also appoint a fiscal representative in Japan (commonly referred to as a tax agent) who resides in Japan and will make the submissions on their behalf.
Foreign companies or foreign investors who decide to open a company in Japan can start thinking about appointing a tax agent as soon as possible, after the legal entity is registered, so that the agent can start acting on behalf of the company as early as the first due submissions to the tax authorities.
Our team lists some of the most important actions undertaken by a fiscal representative in Japan:
- Completing and filing the income tax returns;
- Paying the due taxes, according to the payment deadlines;
- Receiving any due refunds from the Japanese Government;
- Receiving documents provided by the tax agency, communicating with the Japanese tax agencies as needed on behalf of the taxpayer it represents.
While all companies that wish to benefit from the assistance offered by a dedicated tax agent can appoint the representative, such an appointment becomes mandatory in the case of foreign companies that have no permanent establishment in the country and wish to be involved in certain business activities in Japan.
The appointment of the fiscal representative in Japan is duly notified to the authorities via a special form. This is submitted to the tax office belonging to the tax jurisdiction in which the company is incorporated or where the foreign company without permanent establishments will conduct its activities in Japan.
Taxation handled by a tax agent in Japan
The tax agents will assist taxpayers with compliance for companies or individuals. For this purpose, we remind investors who are interested in company formation in Japan of the following relevant taxes:
- The initial 23.2% corporate income tax rate to which local taxes apply, making the effective tax reach a value of 30 to 34%;
- The standard consumption tax which has a value of 10% and it includes the 7.8% national tax and 2.2% local taxes, combined;
- The reduced consumption tax rates of 0% or 8% (also calculated as the combination of the 6.24% national tax and the 1.76% local tax);
- The mandatory social security contributions made by the employer, with the highest portion for the employer of about 16.23%.
The tax agent is the one to submit the needed returns for these taxes, and handle other issues.
Appointing a tax or fiscal representative is a chosen step for most investors, once they complete the procedures for company registration in Japan. If you are ready to start the business formation process, our team will assist you.
Our team specializes in a wide range of solutions for companies and individuals. Some of the other services we offer to clients include those related to relocation. Our immigration lawyers in Japan can answer your questions if you are interested in immigration to Japan or Japan residency.
Contact us if you want to know more about the fiscal representative in Japan.