Tax and Insurance
- Main Types of Taxation
- Year-end adjustment (nenmatsu-chosei) / Filing income tax return (kakutei-shinkoku)
- Main Types of Insurance
Main Types of Taxation
International residents in Japan must pay taxes the same as Japanese. There are two major types of taxes, national taxes and local (Municipal and Prefectural) taxes.
| National taxes | Income tax, alcohol tax, consumption tax (including local consumption tax), etc. |
|---|---|
| Local taxes | Civil and prefectural tax, light vehicle tax, etc. |
Income tax (national)
The national government imposes a tax on individuals’ income. It is calculated in a way that it deducts an allowance from your annual income and is multiplied by the tax rate. If you are employed by a company, your income tax is automatically deducted from your paycheck monthly.
Consumption tax (including local consumption tax)
8-10% consumption tax is imposed on the purchase of all products and services. When consumption tax is included in the price of the item, the tax is called uchizei (tax included) and the tax not included in the price but is charged separately is called sotozei (tax excluded).
Inhabitant tax (municipal and prefectural tax)
This is a local tax that is imposed by the local government, where you register your residence as of January 1 of the tax filing year, on the basis of your previous year’s income.
Tax on automobiles
The term “automobile” includes cars, trucks and buses, and the like. Taxes involved in automobiles include automobile tax (Jidosha-zei), vehicle weight tax (Jidosha-Juryo-zei) and consumption tax.
Those who own a car as of April 1 of each year must pay the automobile tax. Vehicle weight tax must be paid at the time of automobile inspection (shaken).
Light vehicle tax (municipal tax)
Those who own a motor vehicle classified as a light vehicle as of April 1 must pay the light vehicle tax every year. Light vehicles include any light-weight cars, small motorcycles, motorized bicycles, and small two-wheeled automobiles.
Fixed asset tax (including city planning tax)
This is a municipal tax imposed on land and houses.
Year-end adjustment (nenmatsu-chosei) / Filing income tax return (kakutei-shinkoku)
What is Year-end Adjustment (nenmatsu-chosei)?
(for those who work at a company/office)
Every month, a fixed amount of income tax is deducted from your salary. The total of these monthly deductions and the proper amount of income tax you are required to pay may not be the same. Year-end adjustment is a process that allows an adjustment if there is any difference between these two amounts. The adjustment is made by your employer.
Filing income tax return (kakutei-shinkoku)
(for Self-employed persons and part-time workers)
If a taxpayer uses this system, they calculate their income tax by themselves based on their annual earnings from January 1 to December 31 and file tax. File your income tax return for the previous year between February 16 and March 15 at the tax office in your residential area. If there is additional tax imposed from the calculation, pay the amount to the tax office. The income tax return form is available at the local tax office. There is an English version, too. You can download it from their website:
If you have a My Number Card, you can easily prepare your tax return online. Please refer to the manual below for more details.
Main Types of Insurance
Social Insurance System
The social insurance system is a public insurance system to ensure your everyday life. In Japan, there are 5 types of social insurance: medical, pension worker’s compensation, employment, and long-term care insurance. International residents living in Japan must enroll in these insurances depending on an individual’s status of residence.
Those who are working for Japanese Companies
Those who work 30 hours or more a week at companies/offices that are entering the social insurance system must enroll.
① Medical insurance (iryo hoken)
After you are employed, your company will give you a health insurance card (Kenko- hoken-sho) with your name and birthday on it. Inform your company about illness, injury, childbirth, or death. If you use your health insurance card when receiving medical treatment, you only have to pay 30% of the medical cost in principle. The insurance premium is deducted from your salary every month.
② Employee pension insurance (Kosei nenkin hoken)
After being employed, you are required to enroll in the Employee Pension Insurance. 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 monthly.
③ Long-term care insurance
People between the ages of 40 to 64 years old must enroll in this insurance. When you become 65 years old or older, become bedridden and require nursing care for daily living such as bathing, eating and elimination, or support such as household chores and dressing, you can receive the services through your long-term care insurance. The fee of the services varies according to your income and age. Long-term care insurance premiums are deducted from your salary together with the premium of your health insurance every month.
④ Worker’s Compensation Insurance
If you receive an injury or contract a disease while commuting or at your workplace, you can receive compensation for your medical fees and time off from work. In the case of death, compensation will be provided to the family. Report these incidents to the company immediately. The premium for the insurance is paid by your employer. This system covers all workers, including international ones.
Labor standard inspection offices that cover your company area (Japanese)
⑤ Employment Insurance
Employment Insurance is for when you are unemployed, either because you left your work or were released/fired. The insurance provides for daily living expenses while you search for new employment. Ordinarily, your employer completes the necessary procedures for employment insurance for employees who are expected to work for them over a certain period of 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 unemployment benefits, you must prove you are actively looking for new employment and are healthy enough to work. In principle, you must have been enrolled in the program for a certain period of time in order to be eligible to receive this benefit. The amount paid by Hello Work is calculated based on the person’s salary and length of employment. The payment date and the period of payment differ depending on whether you voluntarily left your job or were fired. Be aware of these things when you leave your job.
★ Hello Work in Kyoto (Japanese)
Those who are not covered by the social insurance by 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 (subject to people between 40-64 years old) by yourself.
★ For the National Health Insurance System and National Pension System ⇒ Click Here (Japanese)
＊If you are the spouse of a person who is covered by the employer’s social insurance and earn less than ¥1,300,000 per year, contact your spouse’s company to enroll yourself as dependent in the insurance. Medical insurance premiums as well as pension premiums for dependents shall not be paid separately.