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Tax Reference Guides for Various Countries

Tax Reference Guides for Various Countries

In the initial stage of business establishment, the benefits of cost optimization are self-evident.

Among them, how to handle the optimization of financial work costs such as finance and taxation is a problem considered by many entrepreneurs.

Some people entrust the financial work to a professional accounting agency, while others entrust the financial and tax work to a friend who is an accountant or part-time financial staff.

Basic corporate tax in Japan

Basic corporate
tax in Japan

  • In Japan, taxes are broadly divided into national taxes (levied by the central government) and local taxes (levied by prefectural and municipal governments). The major corporate tax categories are as follows:

Corporate Tax

Small & Medium Enterprise Tax

Local Corporation Tax

Classified as local taxes
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Enterprise Tax

Prefectural tax collection

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Inhabitant Tax

Tax collection by prefectures, cities, towns and villages

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GST

Pay plus value tax system

This is a national tax, essentially corporate income tax, based on a progressive tax rate. All sources of corporate income are taxable.

• Net profit below 8 million yen                          15%

• Net profit exceeding 8 million yen                23.2%

Large Enterprises (capital
over 100 million yen):

Although categorized as a national tax, it is calculated as an additional surcharge on corporate tax. This is an additional tax levied based on the corporate tax amount, classified as a local tax. Tax Calculation: Corporate Tax × 10.3%.

• Net profit below 8 million yen                      1.55%

• Net profit exceeding 8 million yen               2.39%

Levied by prefectural governments, based on corporate income. Tax rates vary depending on income level, approximately 3.4%–7%.

• Net profit below 4 million yen                      3.5%

• Net profit between 4 mil and 8 mil yen          5.3%

• Net profit exceeding 8 million yen                    7%

A local tax imposed by both prefectural and municipal governments. It consists of two components:
Corporate Tax Levy: approx. 10% of the corporate tax liability.
Per Capita Levy: a fixed amount based on company size, minimum JPY 70,000, payable by all companies (even those without profit). For companies incorporated less than one year, the tax is prorated monthly. Rates vary by locality.

Japan applies a value-added tax system. The current rate is 10% (8% for certain goods such as food and beverages).
Exemption: Start-ups are exempt during their first two fiscal years if their capital is below JPY 10 million and the prior year’s sales do not exceed JPY 10 million. However, tax liability arises even within the first two years if:

• Taxable sales in the first six months exceed JPY 10 million.

• Payroll expenses in the first six months exceed JPY 10 million.

Note: Since consumption tax is collected from consumers, companies must remit it regardless of whether they operate at a profit or a loss.

The above are all the various tax rates in Japan.  A detailed introduction to each tax rate is provided below.

This is a national tax, essentially corporate income tax, based on a progressive tax rate. All sources of corporate income are taxable. Tax Calculation: Corporate Tax = Taxable Income × Corporate Tax Rate - Deductions Small and Medium Enterprises (capital under 100 million yen):
• Net profit below 8 million yen: 15%.
• Net profit exceeding 8 million yen: 23.2%.
Large Enterprises (capital over 100 million yen): Unified tax rate of 23.2%.

Although categorized as a national tax, it is calculated as an additional surcharge on corporate tax. Tax Calculation: Corporate Tax × 10.3%. Net profit below 8 million yen: 1.55%, Net profit exceeding 8 million yen: 2.39%.

Levied by prefectural governments, based on corporate income. Tax rates vary depending on income level, approximately 3.4%–7%.This is a local tax levied to support prefectural public services, with rates varying by region. Tax Calculation: Enterprise Tax = Income × Enterprise Tax Rate Rates (Tokyo Example):
• Net profit below 4 million yen: 3.5%.
• Net profit between 4 million and 8 million yen: 5.3%.
• Net profit exceeding 8 million yen: 7%. Only payable if the company generates profit.

A local tax imposed by both prefectural and municipal governments. Rates:1.Corporate Tax Rate Component: Net profit below 8 million yen: 0.15% Net profit exceeding 8 million yen: 0.23%. 2.Equal Portion: Based on company size, with a minimum of 70,000 yen. This applies to all companies, regardless of profitability. Taxes are used for local infrastructure and public services. For companies operating less than a year, monthly calculations apply, with rates varying by locality.

Japan applies a value-added tax system. The current rate is 10% (8% for certain goods such as food and beverages).
Exemption: Start-ups are exempt during their first two fiscal years if their capital is below JPY 10 million and the prior year’s sales do not exceed JPY 10 million. However, tax liability arises even within the first two years if:
• (1).Taxable sales in the first half of the year exceed 10 million yen.
• (2).Total wages paid in the first half exceed 10 million yen.

Note: Since consumption tax is collected from consumers, companies must remit it regardless of whether they operate at a profit or a loss.

The main corporate tax burden in Japan is composed of: National Taxes: (Corporate Tax + Local Corporation Tax)+Local Taxes: (Inhabitant Tax + Enterprise Tax).In practice, the effective corporate tax rate for most companies is approximately 30%–35%.

Malaysian Corporate Taxation

Malaysian Corporate Taxation

After registering with the Malaysian Inland Revenue Board, companies are required to declare and pay relevant taxes, fulfilling their tax obligations and ensuring that their operations comply with Malaysia’s tax framework. The main types of taxes in Malaysia are as follows:

Corporate Income Tax (CIT)
24%

Sales & Service Tax (SST)
8% & 10%

Withholding
Tax (WIT)

10%-15%

Personal Income Tax (PIT)
0%-30%

The main all the various tax rates in Malaysia.
The following is a detailed introduction to the various tax rates.

Malaysia follows a territorial tax system, meaning that companies established in Malaysia are taxed on income derived from within Malaysia. Foreign-owned companies with more than 50% foreign shareholding do not qualify for the SME tax rate and are subject to the standard corporate tax rate of 24%, regardless of profit levels.

Malaysia introduced the Sales and Service Tax (SST) in 2018, replacing the previous Goods and Services Tax (GST) system.
1. Sales Tax (10%):
The standard sales tax rate is 10%, applicable to most goods.
A reduced rate of 5% applies to certain specific goods, such as petroleum products, building materials, and watches.
2. Service Tax (8%):
Effective March 1, 2024, the service tax rate for most services increased from 6% to 8%.
A reduced rate of 6% applies to specific services such as dining, telecommunications, parking, and logistics.
Zero-rated supplies (0%) must still be reported for SST purposes but the tax rate is 0%. Exempt supplies are fully exempt from SST and no tax payment is required.

Payments made to non-resident companies, such as royalties, technical service fees, or interest, are subject to withholding tax at 10%–15%, depending on the Double Taxation Agreement (DTA) between Malaysia and the recipient’s country.

Foreign individuals earning income sourced from Malaysia are subject to Personal Income Tax (PIT). Tax treatment depends on residency status:
A.Malaysian Tax Residents:Individuals residing in Malaysia for more than 183 days in a year are considered tax residents.Taxed on a progressive scale of 0%–30%, similar to local residents.Eligible for personal reliefs and deductions.
B.Non-Malaysian Tax Residents:Taxed at a flat rate of 30%. Not eligible for resident personal reliefs or exemptions.

Corporate Income Tax

CIT 24%

           Malaysia follows a territorial tax system, meaning that companies established in Malaysia are taxed on income derived from within Malaysia. Foreign-owned companies with more than 50% foreign shareholding do not qualify for the SME tax rate and are subject to the standard corporate tax rate of 24%, regardless of profit levels.

Sales and Service Tax

SST 8 & 10%

         Malaysia introduced the Sales and Service Tax (SST) in 2018, replacing the previous Goods and Services Tax (GST) system.

  • Sales Tax (10%):
    The standard sales tax rate is 10%, applicable to most goods.

    A reduced rate of 5% applies to certain specific goods, such as petroleum products, building materials, and watches.
  • Service Tax (8%):
    Effective March 1, 2024, the service tax rate for most services increased from 6% to 8%.

    A reduced rate of 6% applies to specific services such as dining, telecommunications, parking, and logistics.

Additional notes: Zero-rated supplies (0%) must still be reported for SST purposes but the tax rate is 0%. Exempt supplies are fully exempt from SST and no tax payment is required.

Withholding Tax

 WIT 10%–15%

          Payments made to non-resident companies, such as royalties, technical service fees, or interest, are subject to withholding tax at 10%–15%, depending on the Double Taxation Agreement (DTA) between Malaysia and the recipient’s country.

Personal Income Tax

PIT 0-30%

          Foreign individuals earning income sourced from Malaysia are subject to Personal Income Tax (PIT). Tax treatment depends on residency status:
1. Malaysian Tax Residents: Individuals residing in Malaysia for more than 183 days in a year are considered tax residents. Taxed on a progressive scale of 0%–30%, similar to local residents. Eligible for personal reliefs and deductions.

2. Non-Malaysian Tax Residents:Taxed at a flat rate of 30%. Not eligible for resident personal reliefs or exemptions.

Bookkeeping for Entity Company:
Frequently Asked Questions Q&A

Q1. What should be noted when outsourcing bookkeeping services beyond the basic legal provisions?

  • A: In addition to the basic legal requirements, it is necessary to establish clear procedures for the transfer and receipt of accounting data. Agreements should also specify the methods of accounting record storage and related responsibilities to ensure the safety and traceability of the records. Additionally, the standards for preparing and providing financial accounting reports should be clearly defined. These precautions help protect the interests of both parties and ensure compliance and orderliness in outsourced bookkeeping services.

Q2. What are the benefits of outsourcing bookkeeping services?

  • A: First, bookkeeping firms have experienced professional teams that are well-versed in the latest financial and tax regulations. This ensures that a company’s accounting processes comply with policies, reducing risks caused by unfamiliarity with regulations. Second, outsourcing bookkeeping is more cost-effective than hiring a full-time accountant, making it an efficient and economical option, especially for small and medium-sized businesses.

Bookkeeping for Entity Company:Frequently Asked Questions Q&A

A: In addition to the basic legal requirements, it is necessary to establish clear procedures for the transfer and receipt of accounting data. Agreements should also specify the methods of accounting record storage and related responsibilities to ensure the safety and traceability of the records. Additionally, the standards for preparing and providing financial accounting reports should be clearly defined. These precautions help protect the interests of both parties and ensure compliance and orderliness in outsourced bookkeeping services.

A: First, bookkeeping firms have experienced professional teams that are well-versed in the latest financial and tax regulations. This ensures that a company’s accounting processes comply with policies, reducing risks caused by unfamiliarity with regulations. Second, outsourcing bookkeeping is more cost-effective than hiring a full-time accountant, making it an efficient and economical option, especially for small and medium-sized businesses.

Accounting and tax related services