Overview

The annual process for individual business owners to report the prior year's income and pay income tax. Both the return and tax payment are due by the deadline. Blue return (青色申告) filers who use e-Tax receive the maximum ¥650,000 special deduction.

Schedule

Applicability

• Applicable to: Individual

Authority

Filing Methods

Additional Details

Blue return (青色申告) filers must attach the Blue Return Financial Statements (青色申告決算書), including an income statement and balance sheet. Filing electronically via e-Tax qualifies for the maximum ¥650,000 special deduction (vs. ¥550,000 for paper filing). The return is submitted to your local tax office (所轄税務署). You can file by mail, in person at the tax office, or electronically via e-Tax. Refund returns (還付申告) can be submitted before February 16.

Penalties for Non-Compliance

Failure to file by the deadline may result in the following penalties: • Failure-to-file penalty (無申告加算税, Art. 66): 15% of tax due (20% on amounts over ¥500,000, 30% on amounts over ¥3 million). Reduced to 5% if filed voluntarily before audit notice. Waived if filed within 1 month with tax already paid. • Delinquent tax (延滞税, Art. 60): 2.4%/year for the first 2 months, 8.7%/year thereafter (Reiwa 7 special rates). • Heavy additional tax (重加算税, Art. 68): 40% if concealment or falsification is found (50% for repeat offenses within 5 years). The Blue Return Special Deduction (青色申告特別控除) requires timely filing. Late filing reduces the ¥650,000/¥550,000 deduction to only ¥100,000.

Legal Basis