Tax and Insurance
Main Types of TaxationLike Japanese citizens, all international 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 Inhabitant tax, Light Vehicle tax, etc.
Income tax (National)The national government imposes a tax on individuals’ income. It is calculated from your annual income by deducting allowances from it and multiplying it 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. Consumption tax included in prices are called Uchizei (内税) and one not included in prices are called Sotozei (外税).
Inhabitant tax (Municipal and Prefectural tax)It is a local tax that is imposed by the local government, where you register your residence as of January 1, on the basis of your previous year’s income.
Automobile TaxesThe term “automobile” includes cars, trucks and buses, etc. Those taxes include Automobile tax (Jidosha-zei), Vehicle Weight tax (Jidosha-Juryo-zei) and Consumption tax. Automobile Tax is imposed on those who own a car as of April 1, every year. Vehicle Weight tax must be paid at the time when the automobile is inspected.
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, motorcycles, scooters, motorized bicycles, etc.
Fixed Assets Tax (Including City Planning Tax)This is a municipal tax imposed for lands and houses.
Nenmatsu-chosei / Kakutei-shinkoku
What is Year-end Adjustment (Nenmatsu-chosei)? (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 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.
What is Kakutei-shinkoku or Filing an Income Tax Return? (For Self-employed persons, part-time 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 residence area. When you pay your income tax according to the calculation, you must pay it to the tax office. The English version of the income tax return form is available at the local tax office, and can be downloaded from the website of National Tax Agency.
Main Types of Insurance
Social Insurance SystemThe social insurance system is public insurance system to guarantee your life. In Japan, there are 5 types of social insurance: medical, pension worker’s compensation, employment, and long-term care insurance. Japanese law requires not only Japanese but also all international residents in Japan to enroll in these insurances depending on an individual’s status of residence.
Those who are working for Japanese CompaniesThose who work 30 hours and more in a week at companies which take part in the social insurance system, must enroll in it.
① Medical Insurance (Kenko hoken)After you are employed, your company will give you a health insurance card (Kenko- hoken-sho), 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 monthly.
② Employee Pension Insurance (Kosei nenkin hoken)After being employed, you are required to enroll in the Employee Pension Insurance (Kosei nenkin hoken). 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 InsurancePeople between the ages of 40 to 64 years old must enroll in this insurance. When you become 65 years old or above, become bedridden to receive daily care for daily life functions such as bathing, eating and elimination, as well as support in household chores and dressing, you can receive the above 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 monthly.
④ Worker’s Compensation InsuranceIf 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 the family. The report aforesaid should be made to the company immediately. The for the insurance is paid by your employer. This system covers all workers including international workers.
Labor Standard Inspection Offices in Kyoto＊Japanese
⑤ Employment InsuranceEmployment 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． You do not need to pay your premiums by yourself．
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 principle, 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 differ depending on whether you voluntarily left your job, or you were fired. Therefore be careful if you would like to leave your job.
Those who are Not Covered by the Social Insurance by EmployersYou 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) by yourself．
＊If you are married to a person who is employed by a company and enrolled in the social insurance covered by the company, and your annual income is less than \1,300,000, contact your husband/wife’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.