When people are thinking about creating a website, we're often asked, "Can website production costs be written off as expenses?"

Website production costs depend on the content, but the going rate is said to be roughly 300,000 to 600,000 yen.
If the production cost is under 100,000 yen, it can be recorded as a deductible expense with no problem at all, and even above that, small and medium-sized enterprises can take advantage of a tax provision allowing amounts under 300,000 yen to be fully deducted at once.

No. 5408 Special provision for the inclusion in deductible expenses of the acquisition cost of low-value depreciable assets for small and medium-sized enterprises

"When a small or medium-sized enterprise acquires a depreciable asset with an acquisition cost of less than 300,000 yen between April 1, 2006 and March 31, 2018 and puts it to use in its business, it may, subject to certain requirements, include an amount equivalent to that acquisition cost in deductible expenses."

National Tax Agency website: quoted from https://www.nta.go.jp/taxanswer/hojin/5408.htm

So what happens if the cost is 300,000 yen or more?
This isn't our field, so we're not entirely confident (^^;) That's why, for this article, we asked Mr. Osakabe of Yamada Kaikei, the Hamamatsu accounting firm that always supports us, and we'll write based on the answers he gave us.

A typical website can be fully deducted at once as advertising expenses

To get straight to the point: an ordinary website intended for publicity and attracting customers can be recorded in full as advertising expenses.
So whether it costs 400,000 yen or 1,000,000 yen, in principle it can be deducted all at once.

To quote Mr. Osakabe's answer...

As for the effect of a website, its content (company information, product PR, etc.) is expected to be updated frequently, so the initial expenditure on the website (i.e. the production cost) is considered not to extend beyond one year.

However, if the website is not updated and is left as it is for more than a year, it must be depreciated according to its period of use.

Also, if it includes features such as product search or shopping functions, it is regarded as software and must be depreciated.

That's the view from a tax accountant's perspective; from here, let me add a few of my own personal thoughts.
(They may not be all that helpful, though... ha ha)

Going by the above, it seems safe to assume that an ordinary website intended to introduce a company or attract customers to a store can be fully deducted at once.
What gives slight pause here is the phrase "if it is left without updates for more than a year, it must be depreciated according to its period of use."
There are cases where a website is completed and published but then left completely untouched without any updates—so does it have to be depreciated in that case? You might well wonder.
But that's probably not the case. That's because recent websites (at least every website we build) are equipped with an easy-update function known as a CMS, such as WordPress.
Whether it is actually updated depends on whether the website owner does so, but at the very least the premise is that it *can* be updated.
On top of that, since it isn't realistic to later record as an asset something that has already been recorded as a deductible expense, I think it's fair to assume it will effectively be accepted.

That said, from the standpoint of attracting customers, it's extremely difficult to get results from a website that is never updated, so let me add that frequent updates are essential if you want results.

When is a website regarded as software?

So what kind of website is regarded as software?
First, as written above, it's when the site "includes product search or shopping functions."
The first thing that comes to mind is that a website with a shopping cart system may fall under the software category.

Also, although not mentioned there, the following features may be regarded as software as well.

* In-store visit reservation function
* Customer management function
* Order-taking functions commonly found on BtoB sites

If your site includes these features, it's best to consult your contracted tax accountant or CPA in advance.

What if the software function is cloud-based?

What happens when a website has software implemented but the function itself is cloud-based?
For example, what if you open an online shop on a platform like "Rakuten Ichiba" and outsource the actual production work to a web production company?
In this case the software—or rather the shopping cart system—is leased from Rakuten and only the store's design work is outsourced to the production company, so I'd say it can be recorded as advertising expenses.

Incidentally, as for the contract fee paid to Rakuten Ichiba, apparently that can be recorded as a [rental fee] (according to Mr. Osakabe, mentioned above).
So it seems the costs of opening a store on Rakuten or another shopping mall can basically be treated as deductible expenses.