Japanese income tax consists of national and local taxes. Consult the English page of the National Tax Agency for details.
The Income Tax Guide for Foreigners provides a comprehensive description of the tax system. The national tax rate ranges from 5% to 45% depending on your taxable income (TI) after various exemptions.
Here is an example. If your monthly salary is 500,000yen (annual salary of 6,000,000yen) and your family structure (tax deductible dependents) is as follows:
- A spouse with no income and no children: Around 15,000yen for National tax and 24,000yen for Local tax per month.
- You are single with no dependents: Around 19,000yen for National tax and 27,000yen for Local tax per month.
Year-End Adjustment of Withholding Income Tax
Usually the amount of income tax imposed on the total amount of salary income in a year does not coincide exactly with the total amount of tax withheld in the reference year. In order to adjust the amount of the annual income tax, a year-end tax adjustment is made when your final wage installment of the year is paid to you. Thereby, you will not be required to file a final tax return by yourself (unless your annual employment income is 20,000,000yen or more).
In order to execute this adjustment, we ask you to have your sign on the following documents:
1. Report on Exemption for Dependents, etc. for this year (扶養控除等申告書）
2. Application for Exemption from Income Tax for Insurance Premiums and Application for Special Exemption for Spouse in YYYY (保険料控除申告書 兼 配偶者特別控除申告書)
Tax Statement (Gensen-choshu-hyo 源泉徴収票)
Your tax statement (so-called “Gensen-choshu-hyo”) is issued in January. It should be required to submit when you apply nursery school or attached if you file final tax return.
*Click here to have English translation of tax statement
Filing Final Tax Return
If you meet one of the cases below, you are required to file a final tax return to the tax office which has jurisdiction over your address (must be same as one on your Foreign Registration Card) during the period from February 16 to March 15.
1） Total employment income receipts exceed Yen20,000,000.
2） Employment income is exempt from withholding income tax because it is paid abroad.
3） Employment income is paid by only one employer and the total amount of various kinds of income other than employment and retirement income exceed Yen200,000.
4） Employment income is paid by two or more employers and employment income receipts (excluding employment income subject to year-end adjustment) and the total amount of various kinds of income other than employment and retirement income exceeded Yen200,000.
5） It is not duty, but you may claim a tax refund by declaring such as deductions for medical expenses. If you had over 100,000yen in out-of pocket medical expenses during the entire calendar year, it ’s worth filing. Medical expenses may include fees paid to doctors, dentists, surgeons, psychiatrists, psychologists, also transportation costs primarily for and essential to medical care that qualify as medical expenses.
All residents of Japan with income, including foreign residents, are required to pay Resident Tax. The municipality in which you were resident on January 1st is the municipality your Resident Tax bill. The amount of Resident Tax includes Prefectural Resident Tax and Municipal Resident Tax, which is determined by the amount of income received between January and December of the previous year, and the number of dependents you have. For example, the resident taxes associated with your income in last year will be charged to you in June this year.
For instance, if you had lived in Japan continuously for one year or more, or if your occupation requires you to live in Japan for one year or more, then you are required to pay Resident Tax this year. You will receive a Resident Tax bill from your employer (U.Tokyo) in June this year.
[How you will be charged]
We use a system called TOKUBETSU-CHOSHU, where you receive a resident tax statement (*Click here to have English translation) from your employer (U.Tokyo). The total resident tax will be divided into a 12 installments and withheld from your monthly salary by U.Tokyo.
Even if you were living in another city in Japan on January 1st and have recently moved to the current city, then your previous municipal office will issue you a bill to your new address. If you are new to Japan this year, you won’t get a bill this time. BUT…it doesn’t mean that you are exempt from resident tax. The bill is definitely coming to you in the following June.
[When you return home]
In the case of termination of your residency in Japan, the resident tax treatment varies as follows:
- Within the same year you became a resident in Japan: You won’t have to pay resident tax because you won’t be a resident as of January 1st in the following year.
- You have a taxable income in previous year, but will leave Japan before you receive a resident tax bill: You have to decide between appointing a tax trustee, completing your income tax filing, or arranging for your bank to direct debit before you leave Japan.
- After receiving a resident tax bill: You have to pay off the rest of remaining resident tax before you leave Japan. It’s also possible to pay it from your last salary from IPMU. We will give you some advice at termination orientation.