Investing in Japan
How to Set Up Business in Japan
Laws & Regulations on Setting Up Business in Japan
Section 3. Taxes in Japan
3.2 Domestic-sourced income
The scope of taxable income for corporate tax differs by the mode of activity of a foreign corporation in Japan, as will be described later. For the purpose of determining the income of non-residents and foreign corporations subject to withholding tax, domestic-sourced income is defined as follows:
- Interest on public and corporate bonds, interest on savings and deposits derived from offices in Japan
- Interest on loans for business operations in Japan
- Dividends on shares or securities investment trusts of domestic corporations
- Consideration for use of real estate or similar property in Japan; rental of ships or aircraft to residents or domestic corporations
- Salaries, wages, bonuses and other compensation for the provision of services in Japan
- Retirement allowances and pensions for services rendered by residents
- Consideration for the services of freelance professionals in Japan
- Consideration for personal services rendered by entertainers, freelance professionals, technicians, etc.
- Usage fees or consideration for transfers of patent rights, know-how, copyrights, etc., in connection with services in Japan
- Usage fees for machinery and equipment in connection with services in Japan
- Prizes offered in Japan for publicity/advertising purposes
- Pensions paid on the basis of agreements concluded in Japan
- Profit on redemption of discount bonds issued in Japan
- Income resembling fixed-interest income
- Certain income from the transfer of real estate in Japan
- Distribution of profits in accordance with a silent partnership contract (Tokumei Kumiai contract)
- Certain income other than the above derived from the management, ownership, or transfer of assets in Japan
- Business income
- Distribution of profits pursuant to a partnership agreement provided for by Civil Law, and other kindred partnership agreements
