Besides paying the monthly dues, filing taxes can be quite a stressful time for anyone living anywhere in the world. But for many lucky foreign nationals based in Japan, the process and hours spent on research and the actual filing become negligible because most companies take care of this on their behalf.
However, for those who: 1) are self-employed, 2) are working for a company that is based overseas 3) are working for a company that does not offer tax filing services for their employees, you may have to do the filing yourself. Here are a few steps that you must take before you file your documents come tax season (or mid-March):
Filing Your Income Tax in Japan
Anyone who is capable of generating income in Japan is required to pay their taxes to the Japanese government. Tax-payers are further categorized into three groups: Residents, Non-residents, and Temporary Residents.
- Residents: People who have their own/leased residence in Japan for over a year. Also, if your contract indicates a period of residence in the country of one year or more, then you may be considered a resident regardless of whether you have a listed residence or not in the country. Residents are also taxed on their income anywhere in the world.
- Non-residents: These are the people who do not have a listed residence in the country. Despite the fact that you do not live in the country, any earning you acquire from and within Japan is subject to taxation. Also, even if you have been residing in Japan for five years or less and are not a Japanese national, you are still considered a non-resident. Therefore, those who have longer employment contracts or are earning money within or from Japan, may be subject to taxation.
- Temporary Residents: These are the people who frequent the country but also work temporarily outside of Japan, while listed on a foreign payroll. Any income that is not remitted in Japan is not subject to taxation, and vice versa.
What (Forms) Do You Need to File Your Taxes?
There are several forms that are required in order to file taxes based on certain circumstances. You can download your tax filing resources from Japan’s National Tax Agency website.
Form A: Majority of individuals who earn income in Japan can use this form
Form B: Those who earn income from real estate, investments, or business operations are required to fill out this form to pay their taxes.
Withholding Tax Slip: Sometime in August or December, your company or employer will issue you a withholding tax slip, mailed to your registered place of residence. If you do not receive this slip around the abovementioned months, you may have to visit the city hall of the municipality you are registered under.
Hanko: This is your personal, registered seal.
When Should You File Your Taxes?
If you are required to pay for taxes beyond the amount withheld by your employer, you are expected to pay your dues in full by March 15th (deadline) of the following year.
For those filling out form B, you may be required to pay prefectural or municipal income taxes if they are not withheld by your employer. This is to be prepaid quarterly.
If you are an expat living here in Japan, you may also be required to file your income taxes in your home country where you hold citizenship on top of your tax duties here in the country. It is best that you consult this with your respective country’s internal revenue office for clarification.