Japan implements Freelance Act and 2026 corporate tax reforms

Japan is implementing significant regulatory and fiscal changes affecting businesses and freelancers. Under the Freelance Act, which took effect on November 1, 2024, companies that employ staff must adhere to strict rules when outsourcing work to individuals or single-person corporations. These obligations include providing written or electronic terms of service and ensuring payment is made within 60 days of receiving deliverables. Violations can lead to guidance, orders, or fines of up to 500,000 yen.

Simultaneously, the 2026 tax reforms introduce new incentives and adjustments for corporations. While wage hike tax incentives for large enterprises will be abolished, they will be maintained for small and medium-sized enterprises (SMEs). A new tax system for specific productivity-enhancing equipment has been established, allowing for immediate depreciation or tax credits for significant investments. Additionally, the threshold for the small-sum depreciation special provision will increase from 300,000 yen to 400,000 yen, providing greater relief for SME equipment purchases.