Japan’s year-end brings important obligations for HR, payroll, accounting, tax and corporate governance. Here’s what international companies need to complete before 2026 closes and what follows in 2027.
Key takeaways
- Japan’s payroll and personal income tax obligations follow the calendar year, while corporate reporting follows each company’s fiscal year.
- Employers must complete nenmatsu chosei, the annual employee income tax adjustment, during December payroll.
- Several payroll and municipal tax reports fall due on February 1, 2027.
- For companies with a December fiscal year-end, corporate tax returns and payments are generally due March 1, 2027.
- HR should review annual leave, minimum wages, work rules and employee declarations before the year closes.
- A shared compliance calendar can help international teams coordinate deadlines across HR, payroll, finance and local advisers.
Why Japan’s year-end needs careful coordination
For an international company operating in Japan, December can bring several compliance processes together.
HR is reviewing leave balances and employment records. Payroll is preparing the annual income tax adjustment. Finance may be closing the books, while corporate tax and governance deadlines are approaching.
Japan’s personal income tax year runs from January through December. Resident tax follows a June-to-May cycle. Corporate accounting and tax obligations depend on the company’s fiscal year, which may end in December, March or another month.
A Japanese subsidiary with a December fiscal year-end may face payroll reporting, corporate tax filings and financial statement preparation during the first quarter of 2027. A company with a March year-end still has to complete its annual employee tax adjustment in December.
The challenge is keeping those responsibilities connected, particularly when payroll, accounting and corporate administration are handled by different teams or external providers.
This checklist focuses on the 2026 calendar year and companies with a December fiscal year-end. It covers the work that needs attention before December 31 and the obligations that follow in 2027.
This guide provides general information and should not be considered legal or tax advice. Deadlines may shift when they fall on weekends or public holidays. Confirm applicable requirements with a qualified adviser.
What should HR review before the end of 2026?
Japan’s year-end HR work focuses on employee records, annual leave, minimum wage compliance and the declarations needed for December payroll.
Not every obligation has a December 31 deadline. Year-end is still a useful checkpoint for identifying gaps before they affect employees or later reporting.
Review annual paid leave
Under Japan’s Labor Standards Act, employees generally become entitled to paid annual leave after six months of employment with at least 80% attendance.
Employees granted 10 or more days must take at least five days within one year of the grant date. Employers must designate leave dates where necessary to meet this requirement.
Non-compliance can result in fines of up to JPY 300,000.
For companies granting leave on a calendar-year basis, HR should review balances before December 31. Employers using individual grant dates need to monitor compliance throughout the year.
Check minimum wages and work rules
Regional minimum wages are typically revised in the fall, with effective dates varying by prefecture.
Before December payroll, employers should confirm that pay meets the applicable minimum wage in each location. This includes part-time employees and other workers covered by the requirements.
Employers regularly employing 10 or more workers at a workplace must maintain written work rules, known as shugyo kisoku. These must be filed with the local Labor Standards Inspection Office, together with the required employee representative’s opinion.
HR should review any changes to working hours, leave or employment conditions taking effect in January and complete the necessary filings.
Prepare for departures and holiday closures
Employees leaving Japan may require special income tax settlement arrangements before departure. Depending on their circumstances, they may also need to appoint a tax agent.
The New Year holiday period can affect payroll processing and banking schedules. Many offices close between December 29 and January 3.
HR and payroll should therefore confirm employee information, departure arrangements and payment cutoffs well before the final week of December.
For a broader overview of local employment requirements, see GoGlobal’s Hire in Japan guide.
What does payroll need to complete at year-end?
Japan’s payroll year-end centers on nenmatsu chosei, the annual reconciliation of employee income tax.
Monthly withholding continues throughout the year, but December adds the adjustment process. January then brings tax payments and several annual reporting obligations.
Complete the annual income tax adjustment
Nenmatsu chosei (年末調整) reconciles the income tax withheld from an employee’s salary with their actual annual tax liability.
Employers calculate the difference and refund overpayments or collect any shortfall through payroll.
For many employees, this process removes the need to file a separate personal income tax return.
The adjustment generally covers resident employees who have submitted the required dependent deduction declaration to their main employer.
Employees earning more than JPY 20 million annually and nonresident employees are generally excluded. Other employees may need to file individual returns depending on their income and deductions.
Employers need to collect the relevant dependent, basic deduction and insurance premium declarations, together with supporting documents where applicable.
Employees who changed jobs during 2026 may also need to provide withholding tax slips from their previous employers.
The practical priority is collecting accurate information in November. Missing declarations can delay December calculations and affect employee refunds.
Account for changes to the 2026 tax adjustment
Japan’s 2026 tax reform revises the basic exemption and employment income deduction used in the annual income tax adjustment. The updated rules apply to the December 2026 adjustment, while revised monthly withholding tables take effect in January 2027.
Payroll teams should confirm that their systems, employee declarations and year-end calculations reflect the applicable rules.
Finance should also consider whether the changes could increase employee refunds and affect December cash flow.
A new 1% special defense income tax is scheduled to take effect in January 2027, alongside a reduction in the reconstruction special income tax rate from 2.1% to 1.1%. The combined additional tax rate will remain 2.1% of the base income tax amount. Employers should confirm the applicable withholding requirements with their payroll provider.
Keep withholding tax payments on schedule
Employers generally remit withheld income tax by the 10th of the following month.
For the final months of 2026, the payment calendar is:
| Payroll month | Payment deadline |
| October 2026 | November 10, 2026 |
| November 2026 | December 10, 2026 |
| December 2026 | January 12, 2027 |
The December deadline moves to January 12 because January 10 is a Sunday and January 11 is a public holiday.
Eligible employers with fewer than 10 regular employees may obtain approval to remit withholding tax twice a year.
For the July–December 2026 period, that payment is due January 20, 2027.
Late payments can result in penalties and delinquency tax.
Prepare for annual payroll reporting
Several reporting obligations normally fall due on January 31.
Because January 31, 2027, is a Sunday, the deadline moves to February 1.
These include:
- Withholding tax slips: Issued to employees, with copies submitted to the tax office where required.
- Statutory payment reports: Submitted to the tax office for salaries, fees and other reportable payments.
- Salary payment reports: Filed with municipalities to determine employees’ resident tax obligations.
- Depreciable asset returns: Filed with municipalities where applicable.
Winter bonuses create a separate social insurance reporting obligation. Employers generally must submit a bonus payment report to the Japan Pension Service within five days of payment.
Resident tax also requires forward planning. The salary payment reports filed in January help determine the amounts employers deduct from payroll beginning in June 2027.
Errors in January reporting can therefore create problems months after the year-end close.
For more on local payroll requirements, see our guide to navigating Japan’s unique payroll requirements.
How should finance prepare for Japan’s annual accounts?
For companies operating through a Kabushiki Kaisha (KK) or Godo Kaisha (GK), fiscal year-end begins the process of preparing annual financial statements under Japanese accounting and company law requirements.
For a December year-end company, much of this work takes place during January and February 2027.
A KK’s annual financial statements generally include:
- Balance sheet
- Income statement
- Statement of changes in net assets
- Notes to the financial statements
- Business report
These documents support corporate tax preparation and the company’s annual approval process.
Finance should enter year-end with reconciled accounts, complete transaction records and a clear timetable for preparing the financial statements.
Review accounting and recordkeeping requirements
Several compliance obligations should form part of the annual accounting close.
- Qualified invoice system: Confirm that invoices issued and received meet the requirements introduced in October 2023.
- Electronic Bookkeeping Act: Check that electronic transaction data is retained in the required electronic format.
- Transfer pricing: Reconcile intercompany charges and confirm that supporting documentation reflects transactions with the parent company and other related entities.
These checks are particularly important for international subsidiaries whose accounting information feeds into a parent company’s consolidated reporting.
Check whether a statutory audit is required
Under Japan’s Companies Act, a KK classified as a large company must appoint an accounting auditor.
The classification generally applies when the company has either:
- Capital of JPY 500 million or more
- Liabilities of JPY 20 billion or more
Many foreign-owned subsidiaries fall below these thresholds. However, shareholder requirements, lender agreements or group policies may still require an audit.
Companies approaching the thresholds should confirm their obligations before the annual accounts are finalized.
Which corporate tax deadlines apply to a December year-end?
Corporate tax returns in Japan are generally due within two months of the fiscal year-end.
For a company closing its books on December 31, 2026, the standard deadline is March 1, 2027. February 28 falls on a Sunday, moving the deadline to the next business day.
A company may qualify for a filing extension, commonly allowing an additional month. However, an extension does not automatically postpone the tax payment deadline.
A Japanese entity may need to file several returns arising from the same financial year:
- Corporate income tax
- Local corporate tax
- Enterprise tax
- Prefectural and municipal inhabitant taxes
- Consumption tax
These obligations involve different national and local authorities.
Finance should confirm which returns apply, whether extensions have been approved and when supporting information must reach the company’s tax adviser.
Plan for corporate tax payments
For a December 2026 fiscal year-end, the standard corporate tax payment deadline is March 1, 2027.
Companies with an approved filing extension may have until March 31 to submit certain returns, but payment obligations generally remain tied to the original deadline.
Late payment can result in delinquency tax. Late filing may also trigger penalties.
Finance should therefore distinguish between the date a return must be submitted and the date the related tax must be paid.
Account for corporate tax rates and interim payments
Japan’s standard national corporate income tax rate is 23.2%. Reduced rates may apply to qualifying smaller companies on part of their taxable income.
Additional taxes include local corporate tax, enterprise tax and corporate inhabitant taxes.
The combined effective corporate tax rate is generally around 30% to 34%, depending on company size and location.
Consumption tax is generally 10%, with an 8% reduced rate for qualifying goods.
Companies may also have interim corporate tax payment obligations.
Where the prior year’s corporate income tax exceeds JPY 200,000, an interim payment is generally required. For a December year-end company, the relevant 2027 payment falls due on August 31.
What should Japanese entities review at year-end?
A Japanese entity has corporate governance obligations beyond payroll, accounting and tax.
For a KK, annual financial statements move through the appropriate approval process. The company must also maintain its corporate records and comply with applicable public notice requirements.
Plan for the annual shareholders’ meeting
A KK holds an ordinary general meeting of shareholders following its fiscal year-end.
For a December year-end company, the meeting is commonly scheduled by March 31, 2027, depending on its articles and governance arrangements.
Shareholders may:
- Approve annual financial statements
- Decide how profits will be allocated, including dividends
- Elect or reappoint directors and statutory auditors
A GK does not have the same formal annual general meeting requirement. Its financial approval arrangements follow its own legal and organizational structure.
Companies should confirm the required approvals and meeting arrangements before the accounts are finalized.
Review public notices and corporate registrations
A KK generally must publish an annual balance sheet notice using the method specified in its articles of incorporation.
This may involve Japan’s official gazette, a newspaper or electronic publication.
Companies should also confirm that their corporate records remain current.
Changes to directors, registered addresses and certain other registered details generally must be filed with the Legal Affairs Bureau within two weeks of the relevant event.
For a KK, director terms are generally up to two years, although qualifying non-public companies may extend them to as long as 10 years.
Reappointments may require registration even when the same director continues.
For businesses that expanded during the year, this review can also reveal whether their governance arrangements still suit the size and complexity of the operation.
How does year-end differ between EOR and direct employment?
Companies employing workers in Japan through an Employer of Record (EOR) have different responsibilities from those operating their own local entity.
Under an EOR arrangement, the EOR is the legal employer and generally handles employee payroll, withholding and year-end tax adjustments.
A company operating through its own KK or GK remains responsible for the full range of applicable employment and corporate obligations, even when it uses external service providers.
| Obligation | EOR arrangement | Own KK or GK |
| Payroll and nenmatsu chosei | Managed by the EOR | Company or payroll provider |
| Employment compliance | EOR handles legal employer duties | Company responsibility |
| Annual accounts and tax | No entity filings solely from EOR employment | Entity obligations apply |
| Corporate governance | No local entity obligations solely from EOR employment | Depends on entity structure |
An EOR can provide a practical way to employ people in Japan without immediately establishing a local entity.
As headcount, revenue and business activities grow, companies may need to reassess that arrangement.
A local entity can provide greater control over employment contracts, customer relationships and day-to-day operations. It also introduces additional accounting, tax and governance responsibilities.
Year-end is a useful time to review whether the current structure still supports the company’s plans.
What should be on Japan’s 2026 year-end calendar?
Japan’s year-end obligations are easier to manage when HR, payroll, accounting, tax and entity deadlines are visible in one place.
For companies with a December 31 fiscal year-end, the calendar should cover both work that needs attention before 2026 closes and filings that follow in 2027.
| Timing | Action | Area |
| October–November 2026 | Collect employee declarations for nenmatsu chosei | Payroll |
| Before December payroll | Confirm updated regional minimum wages | HR |
| December 10, 2026 | Pay November withholding tax | Payroll |
| December 2026 | Complete nenmatsu chosei and reconcile employee income tax | Payroll |
| Within five days of bonus payment | Submit bonus payment report to the Japan Pension Service | Payroll |
| Before December 31, where applicable | Review annual leave and designate outstanding leave dates | HR |
| January 12, 2027 | Pay December withholding tax | Payroll |
| January 20, 2027 | Pay July–December withholding tax, if approved for semiannual remittance | Payroll |
| February 1, 2027 | Issue withholding slips and complete annual payroll reporting | Payroll |
| February 1, 2027 | File applicable depreciable asset returns | Tax |
| March 1, 2027 | File applicable corporate and consumption tax returns | Tax |
| March 1, 2027 | Pay corporate and consumption taxes due | Tax |
| March 31, 2027 | Complete applicable shareholder approvals and extended tax filings | Entity/Tax |
| June 2027 | Begin withholding resident tax for the new cycle | Payroll |
| July 12, 2027 | Complete annual labor insurance reporting | Payroll |
| August 31, 2027 | Make applicable interim corporate tax payment | Tax |
The February 1 deadline deserves particular attention. Several reports must reach different authorities on the same day.
International teams should confirm who owns each filing, what information is required and when external providers need to receive it.
The same applies to corporate tax. An approved filing extension may provide additional time to submit a corporate tax return, but it does not automatically extend the tax payment deadline. Different rules may apply to other types of tax.
Use this calendar as a starting point. Actual obligations depend on the company’s fiscal year, employment arrangements and applicable filing requirements.
Frequently asked questions about Japan year-end compliance
Is the year-end tax adjustment mandatory in Japan?
Employers generally must complete nenmatsu chosei for eligible resident employees who have submitted the required dependent deduction declaration.
Employees earning more than JPY 20 million annually and nonresident employees are generally excluded.
What happens if an employee misses the nenmatsu chosei deadline?
Depending on the circumstances, the employer may be able to complete or correct the adjustment before annual reporting is finalized.
Otherwise, the employee may need to file an individual income tax return to claim applicable deductions.
Do foreign employees in Japan need a year-end tax adjustment?
Yes, if they qualify as Japanese tax residents and meet the applicable employment requirements.
Nationality alone does not determine whether nenmatsu chosei applies. Tax residency and employment circumstances are more important.
What is the difference between nenmatsu chosei and kakutei shinkoku?
Nenmatsu chosei is the employer’s annual reconciliation of income tax withheld from salary.
Kakutei shinkoku is an individual income tax return used when an employee has additional income, deductions or other circumstances requiring separate reporting.
Does a company’s fiscal year-end affect payroll year-end?
No. Employee income tax reporting follows the calendar year regardless of the company’s fiscal year.
A company with a March fiscal year-end must still complete its December payroll tax adjustment and applicable January reporting.
What happens when a Japanese filing deadline falls on a weekend or holiday?
Deadlines generally move to the next business day.
For example, annual reports normally due January 31 fall due February 1 in 2027. The standard February 28 corporate tax deadline moves to March 1.
Can Japan’s year-end filings be submitted electronically?
Yes. National tax filings can be submitted through e-Tax, while relevant local tax reports can be filed through eLTAX.
Electronic filing is mandatory for certain taxpayers and reporting categories.
A smoother year-end starts with clear ownership
Japan’s year-end compliance work continues well beyond December payroll.
Employee tax adjustments feed into January reporting. Salary payment reports affect resident tax withholding from June. Annual accounts support corporate tax filings and shareholder approvals.
For international companies, the challenge is keeping these obligations connected across teams and service providers.
Before 2026 closes, establish a shared calendar. Assign each obligation an owner, confirm the information needed and set internal deadlines ahead of statutory filing dates.
That preparation can make the difference between a controlled year-end process and a difficult start to 2027.
Preparing for year-end in Japan? Let’s talk about how we can help coordinate payroll, tax, accounting and entity compliance across your local operations.
