Pillar Two in Japan
Japan has implemented OECD Pillar Two through Part 2, Chapter 2 of the Corporation Tax Act (法人税法) — covering the international minimum tax amount (国際最低課税額) and the domestic minimum tax amount (国内最低課税額) — and the corresponding Local Corporation Tax Act (地方法人税法), Chapters 3 and 4. The Income Inclusion Rule (IIR) applies from 2024-04-01, while the UTPR and QDMTT apply from 2026-04-01, in each case to fiscal years beginning on or after the date shown.
Implementation Timeline
Each rule applies to fiscal years beginning on or after the date shown.
Quick reference
| Rule | Effective date | Status |
|---|---|---|
| IIR — Income Inclusion Rule | Fiscal years beginning on or after 2024-04-01 | In force OECD qualified |
| UTPR — Undertaxed Profits Rule | Fiscal years beginning on or after 2026-04-01 | In force OECD review pending |
| QDMTT — Qualified Domestic Minimum Top-up Tax Local name: 国内最低課税額 | Fiscal years beginning on or after 2026-04-01 | In force OECD qualified |
| QDMTT Safe Harbour | Available alongside the QDMTT | Case-by-case |
Implementing legislation
- 法人税法 (Corporation Tax Act), Part 2, Chapter 2, Sections 1 & 2 — corporate tax on the international minimum tax amount (IIR) — applies from fiscal years beginning on or after 2024-04-01
- 地方法人税法 (Local Corporation Tax Act), Chapter 3 — local corporation tax on the specific reference corporate tax amount relating to the international minimum tax (IIR overlay)
- 法人税法 (Corporation Tax Act), Part 2 Chapter 2 Section 4 / Part 3 Chapter 3 Section 2 — corporate tax on the domestic minimum tax amount (QDMTT, 国内最低課税額) — applies from fiscal years beginning on or after 2026-04-01
- 地方法人税法 (Local Corporation Tax Act), Chapter 4 — local corporation tax overlay on the domestic minimum tax amount (QDMTT)
- UTPR — introduced by the 2025 Tax Reform and effective from fiscal years beginning on or after 2026-04-01
Practical implications
MNE groups parented in Japan are subject to the IIR for fiscal years beginning on or after 2024-04-01. Where a subsidiary's jurisdictional effective tax rate (ETR) falls below 15%, top-up tax is computed and paid in Japan (as the jurisdiction of the parent entities). Japan applies the IIR through a dual-layer structure: corporate tax under the Corporation Tax Act (法人税法 Part 2 Chapter 2) plus an overlay under the Local Corporation Tax Act (地方法人税法 Chapter 3).
MNE groups with constituent entities in Japan become subject to Japan's QDMTT (国内最低課税額) for fiscal years beginning on or after 2026-04-01. The same dual-layer structure applies for the QDMTT. Where the conditions of the QDMTT Safe Harbour are met, the IIR/UTPR computation at the parent jurisdictions may be exempted.
Japanese fiscal years commonly start on April 1, and Japan's Pillar Two effective dates are aligned to 1 April. Where a group has parent or subsidiary entities in jurisdictions with a January (or December 31) fiscal year start, the relevant in-scope years should be mapped carefully at the group level.
Recent legislative developments
- March 2025: 2025 Tax Reform enacted — UTPR and QDMTT (国内最低課税額) introduced, both effective 2026-04-01
- 2024-03-28: 2024 Tax Reform enacted — additional OECD Administrative Guidance incorporated
- 2023-03-31: 2023 Tax Reform enacted — IIR introduced (effective 2024-04-01)
Related terms
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- OECD Inclusive Framework — Updated Central Record for Purposes of the Global Minimum Tax, approved 2026-05-11 (current as at 2026-05-01). OECD Global Minimum Tax
- e-Gov Search of Japanese Laws and Regulations — 法人税法 · 地方法人税法. elaws.e-gov.go.jp
- National Tax Agency of Japan (国税庁, NTA) — Pillar Two basic circulars and interpretations. nta.go.jp
- Ministry of Finance, Japan (財務省) — Annual Tax Reform Outline (税制改正大綱)
Disclaimer
This page is reference information prepared as of 2026-05-28 by synthesising the primary sources listed above, and is not legal or tax advice. Before applying any of this material in practice, please:
- Verify the latest legislation, administrative guidance, and NTA notices
- Obtain review by a qualified Pillar Two specialist
- Reassess applicability against the specific facts and circumstances of the group
Translation note. The authoritative version of this page is the Korean original (국가별 현황 › 일본). This English version is provided for accessibility and may not capture every nuance of Japanese legal terminology. Where precision matters, please refer to the original Japanese legislation.