The Cabinet Office says corporate furusato nozei can cut your company’s taxes by up to about 90% of the donation. That figure assumes your taxes are large enough. Each tax credit has a cap tied to your company’s own tax bill. The simplified examples below show how those caps bring the real effect down.
Key facts (as of October 2026)
- Maximum effect: About 90% of the donation. About 30% comes from the deductible expense, and up to 60% from tax credits. (Cabinet Office)
- Caps: Each credit is capped at a share of a specific tax, such as 20% of your enterprise tax.
- Who: Corporations that file a blue tax return, including foreign corporations. (Cabinet Office Q&A)
- When: The credit applies to the business year in which you actually donate. (Cabinet Office Q&A)
Where does the 90% figure come from?
It adds up two parts. Every donation is a deductible expense, worth about 30%. On top of that, corporate furusato nozei (kigyo-ban furusato nozei, 企業版ふるさと納税) gives tax credits worth up to 60%. (Cabinet Office)
The credits come from three taxes. (Cabinet Office)
| Tax | Credit rate | Cap |
|---|---|---|
| Corporate inhabitant tax | 40% of the donation | 20% of the corporate tax portion of your inhabitant tax (hojinzei-wari, 法人税割) |
| Corporate tax | The shortfall if inhabitant tax doesn’t reach 40%, up to 10% of the donation | 5% of your corporate tax |
| Corporate enterprise tax | 20% of the donation | 20% of your enterprise tax |
The two “40%” lines work as a pair. Inhabitant tax gives up to 40%. If its cap stops it short, corporate tax can fill part of the gap. That top-up can never exceed 10% of the donation. (Cabinet Office)
Up to about 90% comes back
The bar is one corporate donation. No return gift: the benefit is the tax reduction.
Credits have caps based on your company’s taxes. Source: Cabinet Office. As of October 2026.
How do you apply the caps, step by step?
Work through the three credits in order. Each step uses only the rules in the table above.
- Inhabitant tax. Take the smaller of 40% of the donation and 20% of the corporate tax portion of your inhabitant tax.
- The shortfall. Subtract step 1 from 40% of the donation.
- Corporate tax. Take the smallest of the shortfall, 10% of the donation, and 5% of your corporate tax.
- Enterprise tax. Take the smaller of 20% of the donation and 20% of your enterprise tax.
- Add the three credits. Then add the deductible-expense effect, which depends on your company’s tax rates.
Every example below is a simplified illustration, not a calculation for your company. The tax amounts are round hypothetical numbers. They are not based on real tax rates.
Example 1: large taxes, so no cap binds
The Cabinet Office’s example says a ¥10 million donation can cut taxes by up to about ¥9 million. (Cabinet Office) The tax amounts below are our own hypothetical numbers.
Assume a company with large tax bills. Its inhabitant tax portion is ¥30 million, its corporate tax is ¥200 million, and its enterprise tax is ¥20 million.
| Step | Full rate | Cap | Credit |
|---|---|---|---|
| Inhabitant tax | ¥4,000,000 (40%) | ¥6,000,000 (20% of ¥30M) | ¥4,000,000 |
| Corporate tax | Shortfall ¥0 | ¥10,000,000 (5% of ¥200M) | ¥0 |
| Enterprise tax | ¥2,000,000 (20%) | ¥4,000,000 (20% of ¥20M) | ¥2,000,000 |
| Total credits | ¥6,000,000 (60%) |
Add about 30% for the deductible expense, and you reach about 90%. Nothing in this case hits a cap.
Example 2: medium taxes, so two caps bind
Same ¥10 million donation. This company’s inhabitant tax portion is ¥10 million, its corporate tax is ¥40 million, and its enterprise tax is ¥5 million.
| Step | Full rate | Cap | Credit |
|---|---|---|---|
| Inhabitant tax | ¥4,000,000 (40%) | ¥2,000,000 (20% of ¥10M) | ¥2,000,000 |
| Corporate tax | Shortfall ¥2,000,000, limit 10% = ¥1,000,000 | ¥2,000,000 (5% of ¥40M) | ¥1,000,000 |
| Enterprise tax | ¥2,000,000 (20%) | ¥1,000,000 (20% of ¥5M) | ¥1,000,000 |
| Total credits | ¥4,000,000 (40%) |
The credits reach 40% of the donation, not 60%. The inhabitant tax cap leaves a ¥2 million gap. Corporate tax can fill only half of it, because of the 10% limit.
Example 3: small taxes, so every cap binds
Same ¥10 million donation. This company’s inhabitant tax portion is ¥2 million, its corporate tax is ¥8 million, and its enterprise tax is ¥1 million.
| Step | Full rate | Cap | Credit |
|---|---|---|---|
| Inhabitant tax | ¥4,000,000 (40%) | ¥400,000 (20% of ¥2M) | ¥400,000 |
| Corporate tax | Shortfall ¥3,600,000, limit 10% = ¥1,000,000 | ¥400,000 (5% of ¥8M) | ¥400,000 |
| Enterprise tax | ¥2,000,000 (20%) | ¥200,000 (20% of ¥1M) | ¥200,000 |
| Total credits | ¥1,000,000 (10%) |
Here the credits cover only 10% of the donation. The donation is large compared with the company’s taxes, so every cap binds.
What happens if you donate more?
Once the caps bind, a bigger donation adds no credit. Take the company from Example 2 and change only the donation.
| Donation | Inhabitant tax | Corporate tax | Enterprise tax | Total credits | Share of donation |
|---|---|---|---|---|---|
| ¥5,000,000 | ¥2,000,000 | ¥0 | ¥1,000,000 | ¥3,000,000 | 60% |
| ¥10,000,000 | ¥2,000,000 | ¥1,000,000 | ¥1,000,000 | ¥4,000,000 | 40% |
| ¥20,000,000 | ¥2,000,000 | ¥2,000,000 | ¥1,000,000 | ¥5,000,000 | 25% |
In this illustration, the credits stop at ¥5 million. That is the sum of the three caps. Above that point, each extra yen gets the deductible-expense effect only.
This does not mean a smaller donation is better for you. It shows why the size of the donation and your tax figures should be modeled together.
Which business year gets the credit?
The year in which you actually donate. (Cabinet Office Q&A) Say your business year starts on April 1. To claim in the current year, the donation must happen by March 31.
Local governments often need time to accept a donation. The Cabinet Office Q&A asks them to work with companies so donations arrive within the year when that is the plan. (Cabinet Office Q&A) Under current law, the credits run through fiscal year 2027. (Cabinet Office)
Who can claim the credits?
Corporations that file a blue tax return (aoiro shinkoku, 青色申告) can claim them. This includes foreign corporations. (Cabinet Office Q&A)
A few limits apply to every company. (Cabinet Office)
- The donation must be ¥100,000 or more.
- Donations to the local government where your head office is located don’t qualify.
- Tokyo Metropolis and some wealthy cities in major urban areas are excluded.
- The municipality can’t give your company any economic benefit in return.
For the full rules, see Corporate Furusato Nozei Guide.
What should you bring to your tax accountant?
Your tax accountant should model your actual figures. These items make that faster.
- Your expected corporate tax for the business year you plan to donate in.
- The corporate tax portion of your inhabitant tax, and your enterprise tax, for the same year.
- The donation amount you have in mind, and one or two alternatives.
- Confirmation that you file a blue tax return.
After the donation, keep the official receipt from the local government. You need it for your tax filings. (Cabinet Office Q&A)
FAQ
Will every company get 90% back?
No. About 90% is the maximum. The credits are capped by your company’s taxes, so the real effect can be much lower. (Cabinet Office)
Which cap usually decides the result?
It depends on your tax figures. In the illustrations above, the inhabitant tax cap was the first to bind. Your tax accountant can check which cap applies to you.
Does corporate tax always cover the inhabitant tax gap?
Only partly. The corporate tax credit is limited to 10% of the donation and to 5% of your corporate tax. (Cabinet Office)
Can a foreign corporation claim the credits?
Yes, if it files a blue tax return. (Cabinet Office Q&A) Ask your tax accountant how this applies to a Japanese branch.
Do we get anything else back from the municipality?
No. Economic benefits in return are prohibited. The municipality may introduce your company as a donor on its website. (Cabinet Office)
Can we use these examples to set our donation?
No. They show how the caps work, with made-up numbers. Use your tax accountant’s model for any decision.
This article is general information, not tax advice. The examples are simplified illustrations with hypothetical numbers, not calculations for your company. Ask a licensed tax accountant to model your figures. Information is as of October 2026. Sources: Cabinet Office: Overview (April 1, 2026), Cabinet Office: 2025 tax reform, Cabinet Office: Q&A, project implementation (15th ed.).