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Q&A with a Japanese Tax Account follow-up

The following questions are follow-up questions to some of the questions asked in the video below for our seminar on taxes in Japan.

Shinpei Wakana who is a certified Japanese tax accoutant from Match.Points has been kind enough to answer some of the additional follow-up questions that we received from the guests.

Match.Points has also been kind enough to offer one month of accounting services for free for new clients who learned about their firm through the seminar. Make sure to ask for Shinpei Wakana in the contact form and mention you heard about their services at Scaling Your Company.

For more information on Japanese accounting we recommend our blog series on how to reduce your Japanese taxes.

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1. What would be an acceptable ratio for rent etc for sole proprietors?
For rent, 20% to 50% is common.

Of the rent and utilities, please prorate it by the area used for work.
If you cannot prorate by area, prorate by time spent on the job.

2. Any tax deductions for working from a residence you own (with a mortgage)? How about working in a relative’s home?

For owner-occupied homes, up to 10% can be expensed. This includes depreciation, interest on borrowings, property taxes, utilities, etc.

If you occasionally go to your relative’s house to work, you can pay your relative for the use of the house and include it in your expenses. If you live in a relative’s house and work there, prorate the rent you pay to that relative.

3. Do you have any thoughts on how to reduce consumption tax?
There are limited ways to reduce consumption tax. Two items are presented here.

3A. Outsourcing costs
Salaries are exempt from sales tax, but subcontracting expenses are taxable, so you will pay fewer sales taxes if you outsource rather than hire someone.

3B. simplified tax system(簡易課税制度)
If your sales two years ago do not exceed 50 million yen, you might be able to reduce
consumption tax. In this case, you can choose the more advantageous of the two calculation methods (general tax system and simplified tax system), but please note that prior notification is required to adopt this method.

4. Shimpei-san, Do you have a linkedin profile?

I am afraid I do not have a LinkedIn profile.
I am on Twitter instead. Twitter account: @ShimpeiW_MP

5. Is that as an incorporation or sole proprietor for freee?
It is easy to use freee for a sole proprietor, but a bit difficult for an incorporation.
Freee does not have an English version, but it is useful if you want to file your own tax
returns.

6. Regarding the Company Car for person use question: Is there a standard way to decide how much to pay my own company for company car use?
Or is it up to myself, the director?

The Tax Law does not specify a specific amount. Therefore, there is no problem if a reasonable amount is stipulated in the contract between the company and the individual. Generally, the amount is between 10,000 yen and 50,000 yen per month.

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