Tax Report in Japan

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1. Income Tax Report

Although you may be a foreigner, you must pay tax to the Japanese government or the local government. Here, I will explain about the Income tax. In Japan, income tax means only personal or individual tax, including such as business income, income from real estate, and income from forestry. For income tax, self-assessed taxpaying system is adopted where the taxpayer calculates the amount of income and tax accurately according to the law and pays it. If you are self-employed, you must go through the report procedures for income tax and corporation tax. Also, although you are salaried employee, if there are incomes that have not been withhold tax at the source, you must report them as well. Therefore, if you have to report tax, you must calculate the total income of a year (from January 1st to December 31st) and keep an account of the sales and necessary expenses as well as save any documents made for business in order to report them. Yet, if the report has the standard documents and you are going to report accurately, you can file a blue form for an income tax return which is a favorable in tax system. (The blue return form is accepted for corporation tax as well) If you are filing the blue form, you must turn in the blue return approval application to the district tax office by March 15th of the year you are going to report. Also, if you started a business, you must turn in the blue return approval application within two months since you have started the business in order to receive the blue return. For more information, consult a nearby tax office or a licensed tax accountant.

2. For salaried employee

If you are a salaried employee receiving salary from a company, the employer will deduce the tax in advance from the salary and the company pays the amount necessary to the government altogether. This is called system of withholding taxes. For salaried foreigner who is a "resident", having a address in Japan and has lived for more than a year, he or she will be imposed the same tax rate as Japanese. In this case, the amount will be calculated by the progressive taxation system which depends on the salary. On the other hand, if the foreigner is a non "resident", uniformly 20% of salary will be withheld. In order to be accepted as a resident, you must have a job that will normally take more than a year or have a family making a living together who is a Japanese or have permission for permanent resident. To confirm whether you can be accepted as a "resident" or not, consult a nearby tax office.

Also, when a foreign student have a part time job in Japan, if the person conclude a tax treaty to avoid double tax payment, he or she does not have to pay the tax. To receive this exemption from taxation, you must take student registration certificate and alien registration to the tax office and get the application form for income tax convention. Fill in the necessary information and get your employer to turn in the application form to the tax office. You will be able to avoid double tax payment this way. Also, if you have already got your taxes withhold from your income, you can get the income tax back.

3. Legal problems caused by not reporting the taxes.

If you neglect the tax report, the government will impose the following penalty on you. (The taxation rate may change depending on the circumstances)

  1. Taxes in arrears: an additional taxation due to missing the deadline for the payment (rate of 7.3% of the tax pay from the next day of the deadline up to two months, 14.6% from more than two months).
  2. Additional tax on underreport: an additional taxation when additional tax was found after filing tax by the amended tax report or reassessment.(10% of the additional amount). But if the amended tax report is turned in without expectation of reassessment,this additional tax will not be imposed.
  3. Additional tax on undeclaration: an additional taxation for not turning in the tax return form when there were tax needed to be paid (15% of the tax that needs to be paid).
  4. Special additional tax: when additional tax on underreport is imposed and when one disguise and conceal the amount, an additional taxation on top of the additional tax on underreport (additional 35% of tax in case of Additional tax on underreport, additional 40% of tax in case of Additional tax on undeclaration.)

When an evasion on tax is found by the investigations of the Regional Taxation Bureau and the situation is recognized as vicious evasion, you can be send to the police office.

When you avoid tax payment, there will be many penalty so if there are any thing that is unclear about taxation, consult nearby tax office or licensed tax accountant.