Taxation in Japan 2018

In Japan, people are taxed differently, and it is paid in some ways; the permanent resident taxpayers are taxed based on their worldwide income, while the non-residents will be taxed only on their Japan-sourced income. The non-permanent resident taxpayers will be taxed based on their Japan-sourced income. The National Tax Agency administers taxes.


Taxes and Tax Returns

A tax like this is either deducted right from the source while you might need to pay others personally.

The exact makeup of these tax obligations will vary based on your residency status, your type of work, and how long you have been in Japan, not forgetting if you are dependent or not.


Income Tax

Just like anywhere else in the world, the income tax is deducted from monthly paychecks. This type of tax is called a genuine-choshu-Hyo in the Japanese language. This type of tax is similar to PAYE system employed in the UK; the exact percentage of tax payable will depend on your income level.

The current Japan income tax rates for Japan are as follows:

  • You are to pay 5% of your taxable income if you earn fewer than 1.95 million yen per year
  • You are to pay 10% of your taxable income if you earn about earning 1.95-3.3 million yen per year
  • You are to pay 20% of your taxable income if you earn about 3.3 to 6.95 million yen per year
  • You are to pay 23% of your taxable income if you earn about 6.95 to 9 million yen per year


Tax Returns

In Japan, the company you work for will be the one to file a tax return and not the employees.

The company might only need you to sign some forms confirming your status, e.g., relationship status, number of dependants and living address. Variations in these factors can, in some cases, qualify you for exemptions.


Residence Tax

Income tax is one that many people in Japan tend to overlook. This type of tax will not be deducted at source except if you work for a government agency, like being a direct hire city board of education.

All you have to do is to visit your local city tax office after you must have received a bill which you can then take to a local convenience store to pay. This tax is calculated based on 6% of your annual income, but if it’s in the case of income tax, it is estimated based on your previous year’s earnings.


Consumption Tax

The last one is a consumption tax, and the funniest part is, you pay this type of tax daily in Japan without even noticing. The consumption tax is a tax levied on goods and services we pay for every day, it’s just like the VAT in the UK.

So, when you visit a 100 yen shop, you pay 108 yen for each item because it sits at 8% presently. Also, there is another tax known as the automobile tax, but you only need to pay this if you buy a car, depending on your spending habits.

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