Taxes in Japan are very complicated, and foreigners who are not confident in Japanese may want to look away. There are many types of taxes such as income tax, inhabitant tax, and consumption tax, and the amount of them are far from cheap. However, thanks to these taxes, it can be said that Japan maintains its cleanness and safety. In this article, I will explain the residence tax step by step in order for anyone to understand. If you read this, you will not have to worry about residence tax.
- What is the resident tax in Japan?
- How much should I pay for the resident tax in Japan?
- From When Should I Pay the Resident Tax in Japan?
- How Can I Pay Resident Tax in Japan.
- Those who don’t need to pay the resident tax in Japan.
- 3 Things you should know about Japan’s Resident Tax
- Don’t Forget to Pay the Resident Tax in Japan
What is the resident tax in Japan?
Resident tax is one of a few taxes that all residents are obliged to pay. This tax is paid to the prefecture or city where you live (where your company is located). The higher your income, the larger the amount you will pay.
The resident tax consists of the amount earned by the residents or the company equally (called “per-capita rate”) and the amount earned according to the amount of income of the previous year (called “income rate”).
How much should I pay for the resident tax in Japan?
The tax rate of residence tax is 10% of taxable income. The tax rate of municipal tax is 6%, and the tax rate of prefectural tax is 4%. The municipal tax and prefectural tax ratios vary depending on the municipality in which you live, but the total is set to be 10%.
Taxable income here is simply the amount of salary minus deductions. The details are very complicated, and the conditions vary depending on the individual, so I will omit it this time, but here is a guide.
| Annual Salary Before Tax (yen) | Resident tax per year (yen) ※approximately |
| 1 million or less | 0 |
| 1.5 million | 57,000 |
| 2 million | 70,000 |
| 2.5 million | 91,000 |
| 3 million | 120,000 |
| 3.5 million | 150,000 |
| 4 million | 180,000 |
| 4.5 million | 210,000 |
| 5 million | 250,000 |
| 6 million | 310,000 |
| 7 million | 380,000 |
| 8 million | 460,000 |
| 9 million | 540,000 |
| 10 million | 620,000 |
| 30 million | 258,000 |
| 50 million | 458,000 |
Is there a difference in tax amount depending on where you live?
There are some exceptions to the resident tax rate. Only in Kanagawa prefecture, the prefectural tax is 0.025% higher, and the resident tax for Kanagawa residents is 10.025%.
The municipal tax of Nagoya City is 0.3% lower, and the residence tax of Nagoya citizens is 9.7%. There are only a few differences in tax rates nationwide, and even if you move your residence, the amount of residence tax will not increase or decrease by any percentage.
In addition, in some municipalities, an excess tax of about 300 to 1,200 yen may be levied as a financial resource for forest environment conservation.
From When Should I Pay the Resident Tax in Japan?
People who are older than 16 years old and earn moneyare required to pay this tax. Resident tax is levied on the annual income of the previous year at the address as of January 1.
The residence tax for salarymen is generally deducted automatically from his salary, and he rarely goes to pay it himself, so he does not have to do anything himself.
The part-timer and sole proprietor have to pay the residence tax for one year in one or four times. The latter method of paying taxes by yourself is called “normal collection”, while the former method of deducting tax from salary is called “special collection”.
How Can I Pay Resident Tax in Japan.
In principle, you need to pay the inhabitant tax in cash at the counter of the financial institution, convenience store, or government office specified on the payment slip.
If the payment slip is compatible with Pay-easy, you can also pay using Internet banking, mobile banking, or ATM (automated teller machine).
In addition, credit card payment is possible in some municipalities and even in municipalities where credit card payment is not possible, some electronic money can be used to pay residence tax from the charge amount.
Those who don’t need to pay the resident tax in Japan.
Basically, if the total income amount is 1 million or less, it is exempt from taxation. The tax exemption standards are set by the ordinances of each local government, so please ask them and confirm the details.
Otherwise
- 1. If you are receiving livelihood assistance under the Public Assistance Act as of January 1 of that year
- 2. Persons with disabilities, minors, widows (husbands) who have a total income of 1.25 million yen or less during the previous year (salary income of less than 2044,000 yen).
3 Things you should know about Japan’s Resident Tax
1. Surtaxes for Reconstruction Funding
Surtaxes for Reconstruction Funding was enforced to secure financial resources for reconstruction after the Great East Japan Earthquake (2011). This is a temporary tax increase and the per capita rate is 1000 yen per year, regardless of income.
2. When changing your job
If you quit the company, you need to be careful when. Specifically if you quit or change your job from January to May, you will be automatically deducted from your company salary and there is no problem. However, if it happens in June-December, you may incur unpaid tax payments, in which case you will have to pay them yourself.
3. When moving to a different city
Even if you move to another city, you don’t have to pay any extra residence tax. The residence tax is levied by the municipality that your resident certificate registered to as of January 1st.
Even if you move out on January 2nd, you still pay this tax to the city you used to live in. And of course, you will never be billed twice.
The government office will change the payment destination of the residence tax, so no special procedure is required.
All you need to do is submit a move-in / move-out notification to the government office. From the year after the move-in notification, you will be billed by the city hall in your new location.
Don’t Forget to Pay the Resident Tax in Japan
The system of residence tax is very complicated, but it is essential to understand the contents and pay the tax correctly. Please note that you may be penalized if you continue to be delinquent or default to pay it. Taxes aren’t cheap in Japan, but please pay it so you can have an enjoyable life in Japan.
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