Tax Examiners Cannot Cross Borders, but Information Can

By MISAWA Masaki, Certified Tax Accountant (Zeirishi, Reg. No. 157367) — formerly of Japan’s tax authorities · Published July 12, 2026 · Reviewed July 17, 2026

The authority to conduct a tax examination has clear limits. The Japanese tax authority can ask questions and inspect books and records only within Japan. Exercising such powers inside another country’s territory would infringe that country’s sovereignty (the limits of enforcement jurisdiction). A Japanese tax examiner cannot visit a bank overseas and look into an account.

At the same time, this does not mean the Japanese tax authority has no way of obtaining information about taxpayers with assets or transactions overseas. Two sets of mechanisms are in place: one for gathering information domestically, and one for receiving information from foreign tax authorities.

Domestic information returns

First, domestic collection. When funds cross a border, they pass in most cases through a financial institution in Japan. The statement of overseas wire transfers focuses on this junction: for remittances to, and receipts from, overseas exceeding ¥1 million, the financial institution files a statement with the tax office recording the names of the sender and recipient and the amount (see the separate article on international transfers). In addition, certain residents holding overseas assets totalling more than ¥50 million are themselves required to report the details in a statement of overseas assets (see the separate article on the overseas assets report). These mechanisms collect information on assets located abroad from people and institutions inside Japan.

Exchange of information under treaties

Next, collection from abroad. Through tax treaties and related instruments, Japan maintains a network for exchanging tax information with more than 150 countries and regions. The exchange takes three forms: exchange of information on request, where information needed for a specific examination is sought from the other country’s tax authority; spontaneous exchange of information, where information obtained in the course of an examination is provided because it is useful to the other country; and automatic exchange of information, where specified categories of information are transmitted regularly and systematically.

The CRS: automatic exchange of account information

The flagship of automatic exchange is the CRS (Common Reporting Standard). Whereas the exchanges described above are conducted case by case, chiefly on the legal basis of bilateral tax treaties, the CRS is distinctive in operating as a multilateral framework: a common standard developed by the OECD in which a large number of countries and regions participate. Financial institutions in each jurisdiction report the account information of non-residents (balances, interest, dividends and so on) to their own tax authority, and the tax authorities exchange it with one another every year. Japan has participated since 2018, so information on overseas accounts now reaches Japan even if the account holder files nothing (see the separate article on the CRS and the overseas assets report).

The CARF and crypto assets

This framework has extended to crypto assets. Under the international standard known as the CARF (Crypto-Asset Reporting Framework), from January 2026 users of crypto asset exchange service providers in Japan are required to declare, among other things, their jurisdiction of tax residence, and the transaction information of non-residents is reported by the providers to the tax authority. The information collected is scheduled to be exchanged with tax authorities in other jurisdictions from 2027. Following financial accounts, crypto asset transactions have now also come within the scope of international information exchange.

Tax examiners cannot cross borders, but information does — through the network of information returns and treaties. As long as you are filing correctly, there is nothing in this machinery to be anxious about. And if you realize that some overseas income or assets may have been left out of your filings, reviewing the position early and correcting it on your own initiative is the reassuring course.