During foreigners staying in Japan, it may be incurred income tax obligations. Intended to inform you of this possibility and general requirements concerning Japanese tax law.
The Japanese income tax law provides the scope of taxable income in accordance with resident status. Therefore, initially it must be determined resident status. Resident status is classified as either resident or Non-resident. Resident is further divided into Non-permanent resident and Permanent resident.
The following is a brief explanation of resident status.
A person who has a domicile in Japan, or has had a resident in Japan for one year or more.
In case of principle establishment for living is in Japan, it should be having a domicile.
And in case of staying or living in Japan without having a domicile, it should be resident in Japan.
A resident, who has no intention of residing permanently in Japan, but has had domicile or resident in Japan for five-year or less.
A resident other than non-permanent resident.
A person other than resident.
The following table indicates the scope of taxable income according to resident status.
Non-Permanent Resident : Taxable for Income from Sources in Japan and Income from Sources in Abroad only the portion deemed remitted to Japan is taxable
Permanent Resident : Taxable for Income from Sources in Japan and Income from Sources in Abroad
Non- Resident : Taxable for Income from Sources in Japan (in principle)
Filling Income Return
In Japan each individual's income tax is based on a self-assessment system, under which each taxpayer is required to compute its tax base and tax amount, file a final return with a tax office and pay the tax amount accordingly.
In principle, a taxpayer must add up income for the year, including any income from which taxes were withheld, such as salaries and make a settlement of annual tax liability by filling a Final Return for the year.
Who Must File
In principle, a Final Return must be filed in case of under any of the following categories.
Employment Income Earner
(Salaries, wages, bonuses and other allowances of a similar nature)
Total employment income receipts exceeded ￥20,000,000.
(In case of less than ￥20 million, tax liability for this income is adjusted at year-end on any withholding tax by employer.)
Employment income was paid out side Japan.
Employment income from one payer in Japan only, and total amount of various kinds of income other than employment and retirement income exceeded ￥200,000.
Earner Whose Income is Other Than Employment Income
Total amount of various kinds of income exceeded the total of basic a deduction and other deductions from income and, if tax credits for dividends are entitled, the amount of income tax is more than the amount tax credit for dividends.
A tax refund may be claimed by declaring deductions for medical expenses, etc. on final return, even if you are not required to file a final return.
Income from sources in Japan, such as income from a business carried on in Japan, income from the disposal of assets situated in Japan, income from immovable property situated in Japan.
Income from personal services performed in Japan such as salaries, wages and other remuneration, which are not subject to withholding tax in Japan.
(Generally, it is not able to file except the above cases, due to tax liabilities are settled by separate withholding taxation at source.)
When and Where to File
Final return is required to file at tax office during the periods from February 16 to March 15 and to pay the tax by March 15.
In case of leaving Japan without designating a person to administer the tax affairs, a return must be filed by the time of the departure from Japan.
Estimated Tax Prepayment
As a regulation, basic tax amount to be prepaid in a year comes to ￥150,000 or more, it must be made prepayments for your estimated tax in the year. The amount will be notified by the tax office.
Basic tax amount to be prepaid is, in short, the tax on total taxable income less the tax withheld in the preceding taxable year.
The estimated taxes are to be settled by filing the final return for the year.
Penalties on Tax
If fail to file a correct tax return, it will be incurred an additional tax and a delinquent tax.
- Income Tax for Foreigners in Japan