Withholding tax from income paid to non-residents or foreign corporations


When paying of specific domestic source income to non-residents or foreign corporations, based on the Japanese tax law, income taxes must be withheld and paid.


Kinds of domestic source income subject to withholding and tax rate

Representative examples are as follows;

  1. Interest on deposits…15.315
  2. Dividends of public company …15.315
  3. Royalties…20.42
  4. Interest on a loan…20.42
  5. Consideration for the leasing of real property…20.42%
  6. Remuneration for the provision of personal services…20.42


Withholding obligation

The payer of the income subject to withholding has an obligation to withhold income taxes.  If you paid without withholding, you will be charged penalty taxes.


Due date of withholding tax

By 10th in the following month of payment


Payment outside Japan

Principally, if you did the payment outside Japan, you do not need withhold.  However if the payer has a PE such as a branch in Japan, the payment is deemed to be made within Japan and subject to withholding tax.  In this case, the due date will be the end of next month of payment.


Tax convention

Where the country of residence of a non-resident or a foreign corporation has a tax convention with Japan, the tax rate will be exempted or reduced.


Please note that this news only introduces general outlines and does not include professional advice.  So please make sure not to make any decisions without taking professional advice individually.


We provide outsourcing services of foreign-affiliated companies and domestic companies with international transactions.  We have professional staffs who are able to respond to tax problems arising in accounting such as withholding tax.  Please feel free to contact us if you have interests on our services!