Japan’s New Year Begins in April...Financial Crisis Led to a Unique Fiscal Year [Sunday Culture]

Have you ever invested in Japanese stocks? Despite growing concerns in Japan’s economy due to instability in the Middle East, the Japanese stock market has recently been booming. Japan, which has long been known as a “country that prefers savings to stocks” and was seen as lacking investment appeal, is now attracting renewed attention.

In particular, there has been a surge in funds from overseas institutional investors. The daily trading volume on the Tokyo Stock Exchange’s Prime Market has even exceeded 9 trillion yen (about 83 trillion won) on some days in April. Japanese media outlets are also closely monitoring the stock market. Notably, stocks related to semiconductors and electronics, such as Kioxia and SoftBank, have hit record highs day after day. In periods like this, company earnings serve as key indicators for investors. Analysts emphasize that the upcoming earnings season should be closely watched, as in Japan, companies announce their annual results between late April and early May.

Doesn’t it seem odd to announce annual results more than four months after the year has started? This is due to Japan’s unique fiscal year system. Unlike Korea, which counts a year from January to December, Japan defines its fiscal year as running from April to the end of March the following year. As a result, companies close their books at the end of March, finalize them in early April, and then release their financial results. In this way, with the start of the academic year, new employee onboarding, and university terms all beginning in the first week of April, Japan appears to be greeting the true start of its new year only now. Today, let’s explore Japan’s distinctive fiscal year and the reasons behind its establishment.

The fiscal year for Japanese companies typically runs from April 1 of the current year to March 31 of the following year. Many Koreans who join Japanese companies are initially confused by the need to distinguish between the calendar and fiscal years. In Korea, the new year simply starts in January, so there’s no need to differentiate. However, in Japan, the following scenarios arise.

For example, suppose you submit a project report for a project implemented this January. In Korea, this would simply be described as a project carried out in January 2026. But in Japan, it would be referred to as a project carried out in January 2025. This is because the previous fiscal year in Japan runs from April 1, 2025, to March 31, 2026. Therefore, the period from January to March of the new year in Korea actually belongs to the previous fiscal year in Japan.

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For this reason, quarterly earnings should also be interpreted carefully. In a country where the fiscal year starts on April 1, if we use this year as an example, the first quarter of fiscal year 2026 spans from April to June 2026. What about the already-passed period from January to March of this year? That is grouped as the fourth quarter of fiscal year 2025.

This is why Japanese stationery stores sell “April-start” diaries and planners. Since not only work but also school admissions and other activities begin in April, students also need diaries that start in April.

It is rare globally for a country to start its academic or fiscal year in April. Only countries such as Japan, India, and Pakistan do so. The reason Japan adopted April as the start was due to financial issues.

Japan embraced Western culture and systems during the Meiji Restoration. It was also during this period that imperialism and militarism began to take root. The Japanese government aggressively increased military spending, but faced financial difficulties in 1884 due to insufficient tax revenue. As a result, they started using the budget for the following year in advance. This led to a problem: in 1885, the available funds were reduced.

A diary from MATOKA sold on Japan's Rakuten. This version starts from April 2026. Rakuten.

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To resolve this, the Japanese government moved the start of the fiscal year from July to April. This change meant that 1885 was reduced from a 12-month fiscal year to only 9 months, thereby reducing expenditures and alleviating the financial strain. By intentionally shortening the year by three months, the government also shortened the period over which it needed to spend, thus reducing expenses. Consequently, schools and companies also began to operate according to an April start, and this has become the established practice.

There is another interpretation as well: changes in the tax system also played a role. Until the Edo period, taxes in Japan were paid in rice. From the Meiji era onward, the tax system was switched to cash payments. To do this, farmers first had to harvest rice in the autumn, sell it for cash, and then pay their taxes. The government would then need additional time to prepare the budget based on this revenue. For this reason, it is said that the fiscal year was set to start in April rather than January.

Although Japan is geographically close to Korea and closely tied to it economically, it is quite interesting that the two countries have different ways of dividing the year. The fact that Korea and Japan distinguish between “this year” and “last year” differently, even for the same period, may prompt us to take a fresh look at our familiar neighbor.

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