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National income tax for foreigners is paid by permanent residents, non-permanent residents, and non-residents. Please note that non-residents pay for income tax in Japan with 20% plus 2.1% surtax. On the other hand, permanent and non-permanent residents tend to pay higher income tax because of their income from local and abroad. For better understanding, we recommend you to visit your municipal and prefectural office.<\/p>\n

Let us consider the social security cost first. Elderly people are the most who receive medical care. And since there are many elderly pensioners than young ones, younger generations tend to pay higher taxes, doubled. On the other hand, taxes are used for discounted health care for everyone.<\/p>\n

Education in Japan is compulsory and it is free(almost free). However, because students have to finish their education which takes longer, their school fees are covered by worker’s taxes. That is not only the case.<\/p>\n

Politics in Japan costs higher too. Politicians receive their salaries, bonuses, and expenses such as transportation fees. To make it clear, let us take the time to consider the table below. We will compare Japan and Canada, including the benefits that people receive.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\u00a0<\/td>\n

Japan<\/p>\n<\/td>\n

Canada<\/p>\n<\/td>\n<\/tr>\n

Medical Insurance<\/p>\n<\/td>\n

Public health insurance<\/p>\n

Insurance premiums<\/p>\n

30% self-pay<\/p>\n

Medicine and dental treatment covered by insurance<\/p>\n<\/td>\n

Public health insurance<\/p>\n

No insurance premium<\/p>\n

No self-pay<\/p>\n

Medicine and dental treatment are not covered by insurance<\/p>\n<\/td>\n<\/tr>\n

Pension<\/p>\n<\/td>\n

Two pensions, national pension, and welfare pension<\/p>\n

Both require insurance premiums<\/p>\n<\/td>\n

There are two public pensions, OAS and CPP.<\/p>\n

OAS has no insurance premiums.<\/p>\n

There is also a government-registered personal asset management plan.<\/p>\n<\/td>\n<\/tr>\n

Education<\/p>\n<\/td>\n

Compulsory education 9 years<\/p>\n

Tuition-free (or almost free)<\/p>\n<\/td>\n

13 years of compulsory education<\/p>\n

Free tuition fees<\/p>\n

Enriched ESL and home schools<\/p>\n

Enriched student insurance benefits<\/p>\n<\/td>\n<\/tr>\n

Children’s Allowance<\/p>\n<\/td>\n

0 to 15 years old<\/p>\n

10,000 to 15,000 yen per child per month<\/p>\n

No local child allowance<\/p>\n<\/td>\n

0 to under 18 years old<\/p>\n

Up to $ 533 per child per month (approx. 45,000 yen)<\/p>\n

State-specific children’s allowance<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The table above shows that it is good to live in Japan if you are too young or too old, but when you reach the age wherein you have to work, get ready for paying taxes. Eventually, younger generations and elderlies will benefit and that is okay. <\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Types of Taxes in Japan for Foreign Workers<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Japan has many types of taxes. Amongst others are the<\/em> <\/span>national tax<\/span>,<\/em> the local tax<\/em><\/span>, and the consumption tax<\/em><\/span>.<\/p>\n
So, what are the other types of taxes that apply to foreigners in Japan?<\/p>\n
Aside from income tax, foreigners are subject to other taxes as well. To zoom in on taxes applied only to those employed foreign nationals, here are the three types: income tax, resident tax, and inheritance tax.<\/p>\n
Income Tax<\/strong><\/span><\/h3>\n
This is your tax whenever you receive your pay or salary. In Japan, all working people are obliged to pay income tax. This is deducted from your income from the first day of January each year.<\/p>\n
Please note that the range of taxes varies depending on foreign worker classification. Check out your residential form for your classification. To compute your income tax, follow this formula.<\/p>\n
(Income tax amount = Income amount x Tax rate)<\/em><\/span><\/p>\n
You are also allowed to reduce tax with income tax deduction. Some deductibles are miscellaneous loss deduction, donation deduction, and basic deduction.<\/p>\n
To compute your income tax with an income tax deduction, follow this formula.<\/p>\n
(Income tax amount = (income amount -income deduction amount ) x tax rate -tax credit amount)<\/em><\/span><\/p>\n
Resident Tax<\/strong><\/span><\/h3>\n
This is a tax paid to the local government in which you live and consists of two types: prefectural tax and municipal tax. To compute this tax, follow this formula.<\/p>\n
(Resident tax amount = income percent + per capita rate)<\/em><\/span><\/p>\n
The formula above consists of income percent and capita rate. Income percent is calculated by multiplying the previous year’s income amount by 10% (municipal tax 6% + prefectural tax 4%). The Capita rate depends on your region but it is around 5,000 yen.<\/p>\n
Inheritance Tax<\/strong><\/span><\/h3>\n
This is a tax that may be paid when the property of a deceased person (real estate, securities, deposits, and savings, etc.) is inherited. To compute Inheritance tax, follow this formula.<\/p>\n
(Inheritance tax amount = Inheritance property-Basic deduction x Tax rate-Deduction amount)<\/em><\/span><\/p>\n
This tax is very complicated. It is advised to consult an expert. This way, you can file before the 10-month deadline.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Did you know?<\/h4>\n
Along with Western countries, Japan also uses the progressive tax system. When you reach the first income bracket, you will be subjected to the first tax rate. Then, the remaining amounts will be subjected to the tax rate following the latter tax rate by your taxable income.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Resident Taxes vs. Non-Resident<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Are there any differences in the scope of taxation between residents and non-residents in Japan? Yes!<\/p>\n
To start with, residents are those residing in Japan for one year and more. Non-residents are those who do not qualify as residents. However, both of these classifications are subjected to income tax.<\/p>\n
Consider the table below. <\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\u00a0<\/td>\n \n
Permanent resident<\/p>\n<\/td>\n
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Non-resident<\/p>\n<\/td>\n
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Non-resident (special cases)\u00a0<\/p>\n<\/td>\n<\/tr>\n
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Income other than foreign-sourced income (paid within Japan)\u00a0<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n<\/tr>\n
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Paid outside Japan (foreign-sourced income, remitted to Japan)<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Non- Taxable<\/p>\n<\/td>\n<\/tr>\n
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Paid outside Japan (foreign-sourced income, other ways)<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Non- Taxable<\/p>\n<\/td>\n
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Non- Taxable<\/p>\n<\/td>\n<\/tr>\n
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Paid within Japan (foreign-sourced income)<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Taxable<\/p>\n<\/td>\n
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Non- Taxable<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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How do we know our tax rate? Remember that to compute income tax, you multiply your income amount by the tax rate. The table below assesses your tax rate.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Income Amount Bracket<\/p>\n<\/td>\n
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Tax Rate<\/p>\n<\/td>\n<\/tr>\n
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Under 1,950,000 yen\u00a0<\/p>\n<\/td>\n
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5%<\/p>\n<\/td>\n<\/tr>\n
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Over 1,950,000 yen but under 3,300, 000 yen<\/p>\n<\/td>\n
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10%<\/p>\n<\/td>\n<\/tr>\n
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Over 3,300,000 yen but under 6,950, 000 yen<\/p>\n<\/td>\n
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20%<\/p>\n<\/td>\n<\/tr>\n
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Over 6,950,000 yen but under 9,000,000 yen<\/p>\n<\/td>\n
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23%<\/p>\n<\/td>\n<\/tr>\n
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Over 9,000,000 yen but under 18,000,000 yen<\/p>\n<\/td>\n
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33%<\/p>\n<\/td>\n<\/tr>\n
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Over 18,000,000 yen but under 40,000,000 yen<\/p>\n<\/td>\n
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40%<\/p>\n<\/td>\n<\/tr>\n
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Over 40,000,000 yen<\/p>\n<\/td>\n
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45%<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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How to calculate your income tax?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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To calculate your income tax, follow this formula.<\/p>\n
Income Tax=Income Amount \u00d7 Tax Rate<\/strong>.<\/p>\n
For example, what will be your income tax if your earned income amount is 3,000,000 yen<\/em><\/span>?<\/p>\n
To compute, income tax = 3,000,000 yen x 10. We will use the tax rate of 10% since the income amount is over 1,950,000 yen but under 3,300,000 yen. To conclude, your income tax is \u00a5300,000. Is this right? No!<\/p>\n
Please note that Japan uses a progressive tax system<\/strong>. This means that the more money you make, the bigger tax you will pay. To be more understandable, if you have an annual income of \u00a53,000,000, you will have to deduct 5%<\/strong> from your \u00a51, 950,000. Next, deduct 10%<\/strong> from your remaining \u00a51,050,000.<\/p>\n
Let us do the numbers.<\/em><\/span><\/p>\n
\u00a51,950,000 (the first bracket of income amount) + \u00a51,050,000 (the remaining amount from deducting \u00a51,950,000 to \u00a53,000,000) is equal to \u00a53,000,000 (annual income).<\/p>\n
5% of \u00a51,950,000 is \u00a597,500<\/strong>.
10% of \u00a51,050,000 is \u00a5105,000<\/strong>.
Thus, your annual income tax is \u00a5202,500<\/strong>.<\/p>\n
What if you have a deductible on your annual income?<\/em><\/span><\/p>\n
Let us consider this one. If you have an annual income of \u00a53,380,000, what will be your taxable amount if you have a basic deduction of 380,000?<\/p>\n
First, deduct or subtract the \u00a5380,000(which is the amount of basic deduction) from \u00a53,380,000. That will leave you a taxable amount or adjusted gross income of \u00a53,000,000<\/strong>. Now, you know the drill. Follow the first example.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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