The main local taxes are the inhabitant taxes and the prefectural enterprise tax. The inhabitant taxes are assessed against individuals and corporations by prefectural and municipal governments.
Prefectural and Municipal inhabitant income tax
A taxpayer who is domiciled in Japan as of 1 January each year is subject to the prefectural and municipal inhabitant tax (dofukenmin zeiー道府県民税, shichosonmin zeiー市町村民税). These are based on their income of the prior year. Individuals are subject to these taxes if they reside in a prefecture and a municipality during the year or maintain an office or place of business. Corporations are subject to these taxes if they have an office or place of business in the prefecture and the municipality.
in addition to these taxes based on their income, prefectures and municipalities impose a standard per capital tax (kintouwarigaku-均等割額) on individuals and corporations.
The prefectural enterprise tax is levied on corporations and individuals engaged in business in the prefecture. The tax base for individuals is the enterprise income for the prior year. The computation of enterprise income is similar to business income under the assessment of income tax. For corporations with a capital not exceeding 100 million yen, the tax base is similar to that computed for the Corporation Tax of the current year. Beginning in 2004, corporations with capital exceeding 100 million yen are subject to an assessment by estimation on the basis of business sizes. The prefectural enterprise tax is treated as a deductible expense in computing Individual and Corporation Income Tax.