Tax in Japan

There are three main categories of income tax payers in Japan: non-resident, non-permanent resident and permanent resident. Are considered as non-residents people who have lived for less than one year in the country; they are taxable on their Japanese income only. Non-permanent residents are those who have lived for less than five years in Japan but who have no permanent residence visa. They are taxable on all their income except those that have not been transferred to Japan. Finally, permanent residents are taxable on all their income without exception.

In Japan, income tax is collected at source on salaries. If you have not paid enough tax, or if you paid too much tax, adjustments will be automatically made on the last salary of the fiscal year. However, you must fill in a tax return file at the end of the fiscal year if you are self-employed, if you intend to leave Japan before the end of tax year, if income tax have not been collected at source on your salary, if you have more than one employer at a time or if you want to apply for tax rebates for medical expenses or social insurance premium for instance. To fill in your final tax return, you must go to the municipal tax division and provide statements of your income during the previous year, your Alien Card registration, you inkan and all the documents related to your exemptions request. Your final tax return must be returned before March 15 of the following year.

The average income tax rate is of 17 % in Japan.

 Good to know:

Tax return forms are sent by email to those who have lived for more then a year in Japan and who have already filled in a tax return form in the past.

The citizen tax:

A citizen tax is also levied by both the prefecture and the city of residence, irrespective of a person's nationality. The citizen tax is based on your income and is annualy fixed by each Japanese municipality. The citizen tax may be collected at source on your salary. If not, you will receive a municipality tax bill from your local administration.

 Useful links:

National Tax Agency – Income tax information for foreigners in Japan

http://www.nta.go.jp/taxanswer/english/12001.htm

Ministry of Finance – Japan

http://www.mof.go.jp/english/

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