Taxes are inevitable and part of living and working in Japan is paying your portion. Japan operates on a withholding tax system, wherein your employer(s) withhold a percentage of your salary every month. This amount will then be applied once taxes are due. For a large number of employees in Japan, this covers all of their taxes, with them not actually having anything to file. The exceptions to this are: if your salary is over 20 million yen per year, if you have multiple employers, if you are self-employed, or if you have extra outside income that amounts to over 200,000 yen.
The Japanese tax season starts on February 16th and goes until March 15th each year, for the previous year’s tax (e.g. 2022 taxes need to be filed between February 16th – March 15th, 2023). This means that in your first year in Japan, since you will not have a history of being paid yet, the tax rate will typically be much lower than in your second year and onwards. Japan breaks down taxpayers into three categories, depending on what income they need to pay their taxes on.
*Note that these categories have nothing to do with your visa status.
Categories of Taxpayers
Non-residents are those who have lived in Japan for less than one year or who have not established a primary domicile in Japan. This typically means study abroad or working holiday visitors, although the distinction is up to the National Tax Authority. Non-residents only pay tax on income earned in Japan.
Non-permanent residents are those who have lived in Japan for less than five years. Non-permanent residents pay tax on income earned in Japan and any income earned abroad that is sent to Japan.
Permanent residents (again, this does not refer to Permanent Resident visa status) are those who have lived in Japan for more than five years of the last ten years. Permanent residents pay tax on income earned in Japan and any income earned abroad, even if the income earned abroad is not sent to Japan.
How to File Your Taxes
If you need to file your taxes, they can either be handled via a paper application provided by your local tax office or online via Japan’s e-tax system, when the tax season begins in February. In order to use the e-tax system, you must have a My Number card with a chip embedded in it and a special card reader. Some smartphones may be used to file instead of using a computer with a card reader. More information can be found (in Japanese) here: https://www.e-tax.nta.go.jp/topics/topics_191016.htm
For most regular employees, the company will do a year-end adjustment around December which means you won’t need to file your income taxes during tax season.
In addition to income tax, resident tax is paid to your ward or city. Wherever your residence is registered on January 1st, that’s where your resident tax will be paid to over the course of the next year. Some companies build this into their wage payment system and automatically deduct your resident tax from your salary each month. If your employer does not, your local tax office will send a set of 4 invoices in early June to be paid throughout the year.
Resources at The National Tax Agency Website
Paying taxes is an important part of living and working in Japan, and similar to health insurance and pension, non-payment could result in seized assets and visa denials. The National Tax Agency (NTA) has a very robust English section of their website. The information is quite dense, but it is the most accurate source of information in regard to specific tax decisions.
The NTA website can be a bit difficult to navigate, but here is a basic table of contents which links to the appropriate English articles:
- Who must file a tax return: https://www.nta.go.jp/english/taxes/individual/12018.htm
- Detailed information about Japan’s tax withholding system: https://www.nta.go.jp/english/taxes/withholing/Information/index.htm
- Detailed information for how to file taxes: https://www.nta.go.jp/english/taxes/individual/incometax_2019.htm
- Income tax calculation: https://www.nta.go.jp/english/taxes/individual/pdf/incometax_2019/41-48.pdf
- Filing for a tax refund: https://www.nta.go.jp/english/taxes/individual/12009.htm
- How to pay your taxes: https://www.nta.go.jp/english/tax_payment/pdf/001.pdf
- Leaving Japan: https://www.nta.go.jp/english/taxes/individual/12004.htm
Once the tax season begins in February, most ward offices within Tokyo offer tax counseling in a variety of languages. More information concerning what services are being offered can be found on your local ward or city’s website.
Finally, while typically in Japanese, there are a number of books available to help sole-proprietors and freelancers file taxes in Japan and properly expense company-related purchases. A brief overview of expensable purchases can be found at https://www.nta.go.jp/english/taxes/individual/12015.htm.
National Tax Agency Contact Numbers
Tokyo: 03-3821-9070
Osaka: 06-6941-5331
Nagoya: 052-971-2059
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