Income Tax In Japan For Foreigners

With the number of foreigners undertaking japan assignments set to increase in coming years the issue of how to compensate those employees in a tax efficient manner has never been more important.

Income tax in japan for foreigners. Your taxable income after the basic deduction is 3 000 000 yen 3 380 000 380 000. Local income taxes generally in japan the local inhabitant s tax is imposed at a flat rate of 10. And local tax total 10 of taxable income is separately levied and enterprise tax will be also levied if you are self employed person. The next 1 950 000 yen of income will go into the 5 bucket.

For example your salary was 2 090 000 then you d have to pay 5 on the first 1 950 000 and 10 on the last 140 000. The purpose of this article is to provide an outline of some of the most important issues in structuring expatriate compensation in japan. From 1 january 2013 through 31 december 2037 a surtax known as the special reconstruction income tax 2 1 of standard income tax amount applies in addition to above national income tax. Income tax for foreigners payroll expatiate.

The surtax is comprised of a 2 1 tax that is assessed on an individual s national income tax. Possible deductions include provisions for medical costs spouses and property losses. For tax purposes people living in japan are classified into three categories. Resident a resident is an individual who has a living base in japan or has resided in japan for a continuous period of 1 year or more.

Salary paid outside japan fringe benefits example there comes german expatriate from the german parent company. Income tax return income tax income tax is paid annually on income earned during a calendar year. Income tax is only required on income over 380 000 yen. Japanese local governments prefectural and municipal.

Non resident a person who has lived in. In japan income tax is based on a self assessment system people determine the tax amount by filing a tax return file combined with a withholding tax system taxes are deducted from salary and submitted by the employer. Example 1 single taxpayer let s say you re a single taxpayer living in japan and making 3 380 000 yen a year. The income tax calculation is based on your taxable income minus the standard personal deduction which is equal to 380 000y.

This amount needs to be calculated per salary segment using that table. The different procedures for payroll from japanese staff are as follows basically monthly.