In the case of business operation by foreign company in Japan market regardless of having PE (Branch) in Japan, withholding income tax has to be charged against any gross sale, especially for rendering personal service and royalties (20.42%). To avoid it without PE, we can submit application form for income tax convention to tax authority. To avoid it with PE, we can get certificate of exemption of withholding tax from tax authority.
Unless a foreign company get the exemption of withholding income tax and say a sales figure of for JPY 100K, the foreign company needs to invoice to a local customer with withholding tax (JPY 20,420) to tax authority on client side
If any amount is withheld in invoice although there is PE in Japan, the amount paid in advance as a withholding income tax is offset in tax return filing calculation, so there is no difference in final mount paid in corporate tax payment.
