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Living in Japan

Taxes in Japan

Income Tax (shotoku zei)

While you live in Japan, it is necessary to pay the income tax that operates at 6 different rates : 5%, 10%, 20%, 23%, 33% and 40% (new rates started from the income earned in 2007). The scope of taxable income differs whether you are "resident" or "non-resident", "permanent resident" or "non-permanent resident". Please note that the definition of "permanent resident" in Income Tax Law is different to the actual status of residence of "permanent resident" (visa).

For its deifinition and further information on the income tax in Japan, please see the site below :

>> Income Tax Guide for Foreigners by National Tax Agency


When you work for companies and organizations in Japan, the income tax is already deducted at source from your salary, and it's your employers who will pay it to the Government on your behalf.

If you are self-employed or fall into certain cases defined by the law, you will need to file a Final Tax Return (kakutei shinkoku). For further information, please see the Income Tax Guide for Foreigners.

Inhabitant Tax (jumin zei)

This tax is charged in the middle of the year (usually around June) to those who live in Japan on the 1st of January of the same year. The calculation of its amount is based on your previous year's income. This means that if you didn't have any income the year before, there will be no inhabitant tax to pay.

It is the city/ward office where you had your Alien Registration on the 1st of January of the year that sends you the inhabitant tax bill, so even if you move to other city/ward in the meantime, you still need to pay to the city/ward office of your former residence.

In some cases, the inhabitant tax is withheld from your salary by your employer.

A company (including a branch office) also has to pay Corporate Inhabitant Tax (hojin jumin zei). It consists of per capita levy based on the amount of capital and the number of employees (minimum 70,000 yen) and corporate tax levy based on the amount of the corporate tax.

Corporate Tax (hojin zei) and Corporate Enterprise Tax (jigyo zei)

Like an individual pays income tax for his/her earnings, a company also has to pay Corporate Tax based on the amount of its profit. The rate is 22% for companies with the annual profit less than 8 millions yen, and the capital less than 100 millions yen. For other companies, the applicable rate rises to 30%.

Additionally, there is also Corporate Enterprise Tax that operates at the rates from 5% to 10.08% (for companies with the capital less than 100 millions yen) to a company's income.

Other taxes

Consumption Tax of 5% is charged to almost every type of products, services and transactions.

Other taxes on consumption such as Tobacco Tax, Liquor Tax and Gasoline Tax are already included in the price.

Fix Asset Tax is charged to the owners of land, buildings and depreciable assets for business.

Real Property Acquisition Tax is to be paid at the moment of the acquisition of land or buildings.

Automobile Tax is charged to the owners of automobile.

Automobile Acquisition Tax is to be paid at the moment of the acquisition of automobile.


>> For any advise on the tax issues, please contact our partner accounting firms



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