The National Tax Agency has compiled a view on whether to impose taxes on foreign companies that have completed registration in response to the issue of overseas IT giants that were not registered in Japan. Under certain conditions, such as when the "representative" in Japan does not have decision-making power in the business, corporate tax may not be imposed.
Some overseas IT companies have avoided registering to evade corporate tax liabilities. However, under Japanese law, foreign companies that operate continuously in Japan are required to register their overseas headquarters in Japan. The Ministry of Justice and the Ministry of Internal Affairs and Communications have issued warnings to 48 overseas IT companies for violating registration obligations. By not registering, victims of defamation lawsuits had difficulty obtaining information from offenders. Currently, over 40 companies, including Facebook, Twitter, and Google, have registered.
However, taxation remains an issue, as many companies have generated profits from Japanese consumers, but are not subject to taxation under the current system. A new taxation method called "digital taxation," which was agreed upon by approximately 140 countries and regions in 2021, may provide a solution. This new method allows taxation even if there is no physical business presence.
