Japan has enacted all three pillars of the Global Minimum Tax (GMT) framework, and the first compliance deadlines are now approaching for many MNE groups. This guide sets out what foreign-owned Japanese entities must file, when, and under what conditions local filing can be displaced by central filing.
Scope and timetable
The GMT framework applies to MNE groups with annual consolidated revenues of EUR 750 million or more, imposing a minimum effective tax rate of 15% in each jurisdiction. Japan has implemented three rules:
- Income Inclusion Rule (IIR): applies to fiscal years beginning on or after 1 April 2024.
- Undertaxed Profits Rule (UTPR) and Qualified Domestic Minimum Top-up Tax (QDMTT): both apply to fiscal years beginning on or after 1 April 2026.
For most foreign-owned Japanese entities, the IIR is therefore the immediate priority.
The three filings
GloBE information return (GIR)
Every MNE group subject to the GMT framework must file a GIR. Its purpose is to give tax authorities the information needed to assess risk and verify each constituent entity's top-up tax liability. The GIR contains three sections covering entity-level data, jurisdiction-level data, and information relevant to jurisdictions with taxing rights.
In principle, each constituent entity files locally. Where several entities sit in the same jurisdiction, one may be appointed as a Designated Local Entity to file on behalf of the others.
The compliance burden can be reduced through central filing. Where a GIR is filed in the jurisdiction of the Ultimate Parent Entity (UPE) or a Designated Filing Entity (DFE), and an effective Multilateral Competent Authority Agreement (MCAA) is in place between Japan and that jurisdiction by the local filing deadline, Japanese constituent entities are not required to file a GIR locally. Instead, they submit the GIR Notification (see below). In practice, groups able to use central filing would generally be expected to do so.
The scope of information reported varies by recipient jurisdiction, reflecting the dissemination approach embedded in the GIR framework, which determines what information is shared with which jurisdictions.
Notification for Ultimate Parent Entity of an MNE group (GIR Notification)
Where central filing applies, the GIR Notification is filed in Japan in lieu of the GIR. Both conditions must be met: the GIR must have been filed in the UPE or DFE jurisdiction by the relevant deadline, and an effective MCAA between Japan and that jurisdiction must be in place by Japan's filing deadline. A Designated Local Entity may also be used here, relieving other Japanese constituent entities of the obligation to file individually. Although the form resembles the existing country-by-country reporting notification, it is a separate instrument. Japan has not introduced any advance registration system for GMT purposes.
IIR corporate tax return
Where an MNE group has a top-up tax liability in Japan, a corporate tax return relating to the IIR must be filed. Importantly, Japan does not require nil filing: if no top-up tax arises, no return is needed.
Filing deadlines
For the first fiscal year in which the IIR applies, all three filings must be made within one year and six months from the day following the end of the relevant fiscal year (defined by reference to the UPE's consolidated accounting period). Translated into calendar terms:
- MNE groups with a March year-end: first filing deadline is the end of September 2026.
- MNE groups with a December year-end: first filing deadline is the end of June 2027.
For subsequent years, the deadline shortens to one year and three months.
Groups with a December year-end should take particular care. If a GIR for FYE December 2024 has already been filed in the UPE jurisdiction under the rules of that jurisdiction, the GIR for FYE December 2025 will be the second year of application in that jurisdiction, carrying a shorter local deadline of the end of March 2027. In Japan, however, FYE December 2025 is the first year of application, so the Japanese deadline remains the end of June 2027. Under central filing, the GIR filed in the UPE jurisdiction before the Japanese deadline satisfies the GIR requirement; the Japanese constituent entity then files the GIR Notification in Japan by June 2027, subject to confirming that a valid MCAA is in place.
Penalties
Failure to file the GIR by the deadline without justifiable grounds can expose the representative or other relevant person of the corporation to imprisonment for up to one year or a fine of up to JPY 500,000.
What foreign-owned Japanese entities must actually do
The required actions depend on two key variables: whether the UPE jurisdiction has implemented the IIR, and whether a valid MCAA exists between Japan and the UPE or DFE jurisdiction.
Where an MCAA is in place and the GIR is filed in the UPE or DFE jurisdiction
The Japanese constituent entity files the GIR Notification in Japan. If multiple Japanese entities are involved, one Designated Local Entity can file on behalf of all others. An IIR tax return is required only if top-up tax arises in Japan, which for a Japanese entity without foreign subsidiaries or permanent establishments (PEs) will not occur, since Japan's IIR does not apply to purely domestic constituent entities.
Where no MCAA is in place, or no GIR has been filed in any jurisdiction
Local filing applies. A Japanese constituent entity without foreign subsidiaries or PEs need only file Section 1 of the GIR. Where the entity does have foreign subsidiaries or PEs, and Japan has taxing rights under the IIR over those jurisdictions, Sections 2 and 3 must also be included.
Practitioners should note that central filing relief is available only where the GIR is filed by the UPE or DFE. If an Intermediate Parent Entity files a GIR covering only its own ownership chain, that does not discharge the local filing obligation for the subsidiaries beneath it.
The Side-by-Side Safe Harbour for US-headed groups
The OECD's Side-by-Side Package, released in January 2026, introduces a Side-by-Side Safe Harbour (SbS SH) available to MNE groups whose UPE is in the United States. Where the SbS SH applies, top-up tax under the IIR and UTPR is deemed to be zero for all constituent entities of the group.
However, because the SbS SH applies only to fiscal years beginning on or after January 2026, a GIR will still be required in subsidiary jurisdictions that have implemented the IIR in that first year of application. Furthermore, the election to apply the SbS SH must, in common with other safe harbours, be made within the GIR itself. Japanese constituent entities that are part of US-headed groups must therefore either file a GIR in Japan through local filing, or submit the GIR Notification through central filing, in the first applicable year.
Japanese branches of foreign corporations
Permanent establishments of foreign corporations located in Japan, such as Japanese branches, sit in a different position. Under Japanese law, the obligation to file the GIR and the GIR Notification under the IIR applies only to domestic corporations. Japanese branches of foreign corporations are therefore not required to make those filings under the IIR.
The UTPR and QDMTT do, however, apply to PEs of foreign corporations. Once those rules come into force for fiscal years beginning on or after 1 April 2026, Japanese branches that form part of an MNE group will be required to file the GIR and the GIR Notification, and to file a relevant tax return if top-up tax arises.