Taxation and Insurance
Main Types of Taxation
Like Japanese citizens, all foreign residents must pay taxes. There are two major tax groups, one is national taxes, and the other is local (Municipal and Prefectural) taxes.
★ National taxes: Income tax, alcohol tax, consumption tax, etc.
★ Local taxes: Municipal and Prefectural tax, Light automobile tax, etc.
Income tax (National)
The national government has imposed a tax on individuals’ income. This tax is calculated from your remaining annual income after allowable deductions are made, and then multiplied by a certain percentage. If you are employed by a company, your income tax is automatically deducted from your paycheck.
Consumption tax (Including local consumption tax)
There is an 8% consumption tax (It'll be 10% from October, 2019) imposed on the purchase of all products and services. Consumption tax included in prices are called Uchizei (内税) and one not included in prices are called Sotozei (外税).
Resident tax (Municipal and Prefectural tax)
This is a local tax that is calculated by your ward office (where you are registered as of January 1) on the basis of your previous year’s income.
Tax on automobile purchases
The term “automobile” includes all passenger cars, trucks and buses, etc. For the purchase of automobiles, you must pay Jidosha-zei (Automobile tax), Jidosha-shutoku-zei (Automobile acquisition tax), Jidosha-Juryo-zei (motor vehicle weight tax) and consumption tax. Jidosha-zei must be paid by those who own car as of April 1, every year. Jidosha-Juryo-zei must be paid at the time of the automobile is inspected.
Light Vehicle Tax (Municipal Tax)
Those who own a motor vehicle classified as a light vehicle must pay the Light Automobile Tax on April 1 of every year. Light vehicles include any light weight car, motorcycle, scooter, motorized bicycle, etc.
Property Tax (Including City Planning Tax)
This is a municipal tax for lands and houses.
Nenmatsu-chosei / Kakutei-shinkoku
What is Nenmatsu-chosei or year-end adjustment? (for those who work at a company)
Every month a fixed amount of income tax is deducted from your salary. The total of these monthly deductions that are withheld by your employer and the proper amount of you are required to pay in income tax may not be the same. Nenmatsu-chosei is a process that allows for adjustment if there is a difference between these two amounts. This adjustment is done by your employer.
What is Kakutei-shinkoku or filing an income tax return? (for part workers, etc.)
In this system, you calculate your income tax by yourself based on your annual earnings from January 1 to December 31. You must file your income tax return for the previous year between February 16 and March 15 at the tax office for your area. If the calculated income tax is more than the amount deducted from your monthly payment, you must pay the balance. The English version of the income tax return form is available at the local tax office. This form can be downloaded from the website of National Tax Agency.
National Tax Agency
Main Types of Insurance
Social Insurance System
The Social insurance system is public insurance system to guarantee your life . There are types: medical, pension, industrial accident insurance, employment, and long-term care insurance. Japanese law requires not only Japanese but also all foreign residents living in Japan to enroll in some of these insurances systems depending on an individual’s resident status.
◆ Those who are working for Japanese Companies
Those who work 30 hours and more in a week at companies which take part in the social insurance system must enroll in it.
① Health insurance
After you are employed, your company will give you a health insurance card, which has your name and birthday is written on it. Please inform your company in cases of illness, injury, childbirth, or death. If you use your health insurance card when receiving medical treatment, usually you will only have to pay 30% of the medical cost. The insurance premium is deducted from your salary.
② Pension Insurance (Kosei nenkin hoken)
After being employed, you must submit your pension handbook to your employer to enroll in Kosei nenkin hoken. If you don’t have a pension handbook, you must have one made. Your company should be informed immediately when you reach the age for senior citizens, become disabled, or upon your death by your next of kin. The pension premium is deducted from your salary.
③ Long-term Care Insurance
People between the ages of 40 to 64 years old must enroll in this insurance. If you are 65 years old or above and you have become bedridden and need daily care for daily life functions such as bathing, eating and elimination, or need support in household chores and dressing, you can receive the above services through your Long-term Care Insurance. However, the fee of the services is varies according to your income and age.Long-term Care Insurance premium must be paid together with the premium of your health insurance.
④ Industrial injury insurance
If sustain an injury or contract a disease at your workplace or during your commute to your workplace, you will receive compensation for your medical fees and time off of work. In the case of death, compensation will be provided to an employee’s family. The report aforesaid should be reported to the company immediately. The premium for industrial injury insurance is paid by your employer. This system covers all workers including foreigner residents.
★ Labor Standard Inspection Offices
⑤ Employment Insurance
Employment Insurance is for times you are unemployed, either because you left your work or were fired; the insurance provides for daily living expenses as you search for new employment. Your company may complete the necessary procedures for employment insurance for the employees who have worked for a company over a fixed period for 20 hours or more per week. A part of the employment insurance premium is deducted from your salary, and the rest is covered by your employer.
In order to receive the unemployment benefits, you must show you are actively searching for new employment and must be healthy enough to work. In general, in order to be eligible to receive benefits, you must have been enrolled in Employment Insurance for a certain period of time. The amount received is calculated on the basis of one’s salary and the length of employment. The payment date and the period of payment will differ depending on whether you voluntarily left your job, or you were fired. Therefore be careful if you would like to leave your job.
★ Local Public Employment Office
◆ Those who are not covered by the social insurance by their employers
You must enroll in the National Health Insurance System (except for the people who are on welfare), National Pension System, and Long-term Care Insurance (if you are between 40-64 years old)
★ For further information see this page
* If the annual income of a family member is less than 1,300,000 yen, and you are employed by a company and covered by the social insurance, your family member could be enrolled as your dependent by your employer. Therefore, you must report this to your company so that you will not have to pay unnecessarily extra health insurance and pension premium for your family members.