Choosing your Japan fiscal year is one of the first decisions you make when setting up a company, and it affects when your tax returns are due, how your first year of operation works, and how much admin friction you create between your Japan entity and any parent company overseas. You set it in your Articles of Incorporation, and it affects when your tax returns are due, how your first year of operation works, and how much admin friction you create between your Japan entity and any parent company overseas. Most founders either copy Japan’s April-to-March default without thinking about it or pick December without realizing the implications. This article explains how to make the choice deliberately.
Why Does Your Japan Fiscal Year Choice Matter, and When Do You Decide?
Your fiscal year, also called your accounting period, is the 12-month period at the end of which your company closes its books, prepares its financial statements, and files its corporate tax return. In Japan, private companies have no mandatory fiscal year. You choose it yourself, and you set it in your Articles of Incorporation at the time of incorporation.
That means the decision has to be made before you file. Once you incorporate, changing your fiscal year requires a shareholder resolution, an amendment to your Articles of Incorporation filed with the Legal Affairs Bureau, and a notification to the tax office. It can be done, but it creates a short transitional accounting period and adds accountant costs, so getting it right at the start is worth the effort.
The accounting period matters for three practical reasons:
• It determines when your tax returns are due every year.
• It shapes how your first year of operation looks, including how short your first accounting period may be.
• If you have a parent company outside Japan, it affects how easily the two sets of books consolidate.
What April to March means and why it is not always the right default
April to March is the standard fiscal year in Japan because it matches the Japanese government’s fiscal year, the school year, and the calendars of most large Japanese corporations. Tax accountants, payroll software, and HR cycles are all built around it. Many suppliers and clients operate on it too, so invoicing and payment terms often assume a March year-end.
For a foreign founder with no existing ties to Japan’s corporate calendar, April to March is not automatically the right choice. If your home company runs on a December year, aligning on April to March means preparing two sets of year-end accounts on different timelines every year, running consolidation adjustments, and explaining the gap to your auditors. The cost adds up.
What you actually set at incorporation
You set the closing month of your fiscal year, not the starting month. If you incorporate in July and choose June as your closing month, your first fiscal year runs from the date of incorporation to the following 30 June.
That first period is almost always shorter than 12 months, and a short first period does not give you more time to file the tax return is still due two months after the closing date. More on this in the first-year section below.
Your fiscal year is fixed at incorporation. Choose it deliberately.
- Articles of Incorporation drafted with your closing month set correctly.
- Parent company alignment checked before anything is filed.
- 100+ companies incorporated for foreign founders across Japan.
What Is the Best Month to End Your Fiscal Year?
There is no single right answer, but the following criteria narrow it down for most foreign founders.
Align with your parent company if you have one
If you are setting up a Japanese subsidiary of an overseas company, the strongest reason to choose a particular closing month is to match the parent's fiscal year. Misaligned fiscal years between a parent and subsidiary create a consolidation adjustment layer the subsidiary's numbers have to be re-cut to fit the parent's reporting period, and that work has to happen every year.
For a small entity, this is a manageable cost, but it is an entirely avoidable one. If your parent closes on 31 December, close on 31 December in Japan too.
Think about when you incorporate, not just which month sounds good
Incorporating just before your chosen closing date means your first accounting period is very short, and the first tax return arrives almost immediately. Incorporating just after gives you close to a full year before the first filing deadline.
Example (hypothetical): A founder incorporates in February and chooses a 31 March closing date. Their first accounting period is six weeks long, and the tax return for that six-week period is due by 31 May giving them barely three months from incorporation to first filing. If they had incorporated in April instead, the first return would not be due until May of the following year.
Consider your business cycle
If your revenue or inventory is seasonal, choose a closing date after your peak season. Closing the books when cash is highest and stock is lowest makes year-end easier to manage and presents a stronger balance sheet.
Restaurant, hospitality, and retail founders in Japan often avoid a March or December close for this reason. A service business with steady monthly revenue may not care.
Common choices and who typically makes them
| Fiscal year end | Who typically chooses it | Reason |
| 31 March | Founders working with the Japanese government or large corporate clients | Aligns with the Japanese government and large corporate calendar |
| 31 December | US, European, and Australian founders | Matches most home-company fiscal years |
| 30 June | Some service businesses | Avoids the March and December busy season for accountants |
| Any other month | Founders aligning with a parent company | Consolidation efficiency match the parent's existing close |
Three returns due within two months. Set up early.
- Tax office notifications filed within the two-month window.
- Compliance calendar mapped from your fiscal year-end.
- 100+ companies incorporated for founders across Japan.
What Filing Deadlines Do I Need to Know?
Three deadlines follow directly from your fiscal year-end. All three are measured from your accounting period close date.
Corporate tax return
• Due within two months of your fiscal year-end.
• Example: 31 March close means the return is due by 31 May.
• Extensions are available but must be applied for before the original deadline. An extension for a company with a board of auditors or a statutory audit requirement is commonly available; confirm with your accountant for your structure.
Source: National Tax Agency
Consumption tax return
• Also due within two months of fiscal year-end for most companies.
• Most new KK and GK companies are automatically exempt from collecting consumption tax in their first two years, as long as their base period taxable sales are below the threshold and they have not opted in early.
• If you are not exempt, the consumption tax return follows the same two-month deadline as the corporate return.
Prefectural and municipal tax returns
• Also due within two months of fiscal year-end.
• Filed separately from the national corporate tax return; these are local tax obligations, not part of the NTA filing.
• Each prefecture and municipality has its own office. The Tokyo Metropolitan Government tax page is the reference for companies based in Tokyo.
Deadlines in practice
| Fiscal year end | Corporate tax due | Consumption tax due | Local tax due |
| 31 March | 31 May | 31 May | 31 May |
| 30 June | 31 August | 31 August | 31 August |
| 31 December | 28 February | 28 February | 28 February |
Note: Extensions are available but not automatic. Apply before each deadline. Deadlines falling on a weekend or national holiday move to the next business day.
What Happens in My First Fiscal Year?
The first accounting period is almost always shorter than 12 months. Most founders underestimate how quickly the first filing arrives, and the tax office notification deadline adds another early-stage obligation on top of it.
Your first accounting period is probably a short period
If you incorporate partway through your chosen accounting period, your first period runs from the date of incorporation to the next closing date, not from the start of that period.
Example (hypothetical): A company incorporates on 1 October and chooses a 31 March fiscal year-end. The first accounting period is six months. The corporate tax return for that six-month period is still due by 31 May, two months after the close. The company's accountant needs to be engaged well before that, not in April.
Budget for early accountant engagement. First-year filings are often more complex than subsequent ones because the period is non-standard and the company is establishing its accounting elections for the first time.
The tax office notification deadline
Within two months of incorporation, you must notify the tax office of your company's details, fiscal year, and accounting method. This is a separate obligation from your annual return and it comes first.
Missing this window creates complications with your first return. For the full post-incorporation checklist, see our guide to tax office notifications after incorporating in Japan.
Consumption tax exemption in year one and year two
Note for accountant review before publishing: the consumption tax exemption rules for new companies changed in recent years and involve conditions around base period taxable sales, capital at incorporation, and voluntary registration elections. Confirm current NTA rules on voluntary registration and the first-year exemption thresholds before this article goes live.
General position: most new KK and GK companies with no base period taxable sales above the threshold are automatically exempt from collecting and remitting consumption tax in their first and second fiscal years.
Opting in to consumption tax registration early can be advantageous for example, when the company has significant startup costs and wants to claim input tax credits immediately. Opting in is an election that generally cannot be reversed mid-year, so timing matters.
Your first return can arrive within months. Plan for it.
Time your incorporation date and closing month together, before you file.
Can I Change My Fiscal Year After Incorporation?
Yes, but it requires a formal process and creates a short transitional accounting period between the old and new fiscal year-end.
The process
• Pass a shareholder resolution approving the change.
• File an amendment to the Articles of Incorporation with the Legal Affairs Bureau.
• Notify the tax office.
• File a short-period tax return for the transitional period between the old closing date and the new one.
When it makes sense to change
• When a parent company changes its own fiscal year and wants subsidiaries aligned.
• When the original choice creates recurring consolidation problems that are costing more accountant time than the change would.
• When the business cycle has shifted significantly for example, a company that started in consulting and expanded into seasonal retail.
When it is not worth doing
• In the first two years, a change creates a short transitional period that adds accounting cost without meaningful benefit.
• If the only reason is to delay a tax payment, the NTA may scrutinize the change.
How Does This Interact With My Home Country Taxes?
If you are a US person owning a Japanese company, your Japan fiscal year affects when you report under GILTI, Subpart F, and PFIC rules. A Japanese subsidiary with a March fiscal year-end will have its income included in a different US tax year than a December-close subsidiary, and the timing of inclusions under the GILTI regime follows the subsidiary's year-end, not the US owner's. For the full picture on US tax obligations for Japanese company owners, see our guide to CFC and GILTI for US owners of a Japanese company [LINK PENDING Article 7 requires accountant review before publishing; do not link until cleared].
What Do People Get Wrong About the Japan Fiscal Year?
• Assuming April to March is mandatory and not realizing they had a choice.
• Incorporating in February and choosing March 31, then being caught off guard when the first tax return is due in May.
• Missing the tax office notification deadline within two months of incorporation.
• Forgetting that the consumption tax exemption has an opt-in window. Opting in late cannot be reversed mid-year.
• Aligning with the Japanese calendar when the parent company closes in December, then paying for consolidation adjustments every year.
Most fiscal year mistakes happen before you incorporate.
- Incorporation date timed so your first return is manageable.
- Two-month notification deadline met without a last-minute scramble.
- 100+ companies incorporated by our team across Japan.
FAQ
What is an accounting period in Japan?
An accounting period is the 12-month window at the end of which a company closes its books, prepares financial statements, and files its corporate tax return. In Japan, you set it in the Articles of Incorporation at the time of incorporation. For most Japanese companies, this runs April to March, but private companies are free to choose any 12-month period.
Do I have to use April to March as my fiscal year?
No. Japan has no mandatory fiscal year for private companies. April to March is common because it matches the government fiscal year and most large Japanese corporations, but if your parent company or your own business cycle points to a different closing month, you can choose it freely at incorporation.
When do I need to choose my fiscal year?
Before you incorporate. The fiscal year-end is set in your Articles of Incorporation, which you file to establish the company. You also have to notify the tax office of your fiscal year within two months of incorporation.
When is the corporate tax return due in Japan?
Within two months of your fiscal year-end. A company with a 31 March year-end must file by 31 May. Extensions are available but must be applied for before the original deadline.
How long is the first fiscal year for a new company in Japan, and when is the first return due?
If you incorporate mid-period, your first accounting period runs from your incorporation date to the next fiscal year-end. That can be as short as a few weeks or as long as just under 12 months, depending on when you incorporate. The tax return for that short period is still due two months after the close, so the first filing can arrive sooner than most founders expect.
Can I change my fiscal year after incorporating in Japan?
Yes. You need a shareholder resolution, an amendment to the Articles of Incorporation filed with the Legal Affairs Bureau, and a notification to the tax office. The transitional period between the old and new fiscal year-end will be shorter than 12 months and will require its own tax return.
Does my Japan fiscal year affect my US taxes?
Yes, if you are a US person who owns or controls the Japanese company. The timing of GILTI, Subpart F, and PFIC inclusions follows the Japanese company's fiscal year-end, not the US owner's December calendar year. See our guide to CFC and GILTI for US owners of a Japanese company.
Incorporating in Japan? Get the fiscal year right first.
