Taxation and Pension

As a foreign resident of Japan, your tax status varies depending on the tax treaties between your country and Japan, and on your Status of Residence. Check with your embassy or consulate regarding tax matters specific to your country.

In general, if you are liable for taxes in Japan, you must pay two types of income tax: personal income tax, which is collected by the national government, and resident tax, which is collected by the municipal government.

Everyone in Japan 20-60 years of age must also pay into the National Pension Program. (This program resembles Social Security in the United States.)

Personal Income Tax (Shotoku Zei 所得税)

The National Tax Agency publishes a comprehensive guide to personal income tax in English. Please refer to it if you have questions that are not answered here.

In brief, personal income tax is calculated from your earnings between January 1st and December 31st. Taxable income is calculated based on your total income, minus deductions. The rate of tax depends on your income, and ranges from 5% if your annual income is less than ¥1,950,000 to 40% if it is over ¥18,000,000.

Employer Tax Withholding

In most cases, your employer will ask you to fill out paperwork to determine if you qualify for any of the deductions listed below. Your employer will then withhold the correct personal income tax from your paycheck. At the end of the year, your employer will provide you with a statement of earnings (gensen chōshū hyō源泉徴収票), detailing your income, taxes withheld, and your contributions to the national pension and health insurance. In some cases, your December paycheck may be smaller or larger than usual, if your employer has any adjustments to make to the taxes it has withheld.

Deductions Calculated by Employer

• Spouse Deduction (for people with a dependent spouse)
• Dependent Deduction (for people with children or other dependents)
• Widow/er Deduction (for people whose spouse has died)
• Working Students (for students who work)
• Disability Deduction (for people who are disabled or have disabled dependents)
• Social Insurance Deduction (for people who contributed to the National Pension and Health Insurance)

If personal income tax is deducted directly from your pay (as it is in most cases) you do not usually need to personally submit an income tax return. However, salaried workers with an annual salary of more than ¥20 million or with income of more than ¥200,000 from other sources (e.g. self-employment or capital gains) must submit a final tax return regardless of whether the taxes were previously withheld. Also, if an incorrect amount of tax was withheld from your salary, you must file your taxes to get a tax rebate. Appropriate forms are available at the Tax Office, and office staff can help you with filling out the forms. City hall also accepts tax paperwork during the February-March filing period.

Tax Rebates

You may be eligible to receive a tax rebate if you can claim any of the following deductions, which your employer would not take into consideration when deducting taxes from your salary.

Deductions Calculated by Taxpayer

• Medical Expenses Deduction (for out-of-pocket medical expenses over a certain amount)
• Casualty Loss Deduction (for financial or property loss due to disaster or theft)
• Earthquake Insurance Deduction (for premiums paid on earthquake insurance)
• Donation Deduction (for donations made to national or local government bodies)

Resident Tax (Jūmin Zei 住民税)

Residents of Urasoe (as well as other municipalities) must pay resident tax. Like personal income tax, resident tax is levied based on income earned between January 1st and December 31st, and your taxable income is calculated based on actual income minus deductions. However, deductions are calculated differently than for personal income tax, so generally taxable income is slightly higher for resident tax. The tax rate for resident tax is a flat rate of 10% (4% for the prefecture and 6% for the municipality).

Paperwork for the resident tax is the same as for the personal income tax. If you or your employer filed your tax information as described in the personal income tax section above, you do not need to take any further action until you receive your resident tax invoice.

National Pension (Kokumin Nenkin　国民年金)

All adults ages 20-60 living in Japan are required to pay into the national pension. The National Pension Program will provide for you or your family in the event that you are seriously injured or die during the period you are making payments. Generally employers will deduct premiums from your salary for you. However, please check with your employer to see if payments are being made. If you are not enrolled through an employer (for example if you are student, self-employed, or unemployed), you must visit City Hall to sign up.

Whatever your method of payment, when you enroll in the pension plan, you should receive a blue or brown pension book. Please do not lose this book, as it is required for various pension procedures.

Foreigners who leave Japan after paying into the pension plan for over six months may be entitled to a partial refund.

Getting a Pension Refund (Lump Sum)

To be eligible for the pension refund, you must satisfy all the following conditions and file an application within two years of leaving Japan. This procedure is called Lump Sum Withdrawal (dattai ichiji-kin 脱退一時金).

• You must not possess Japanese citizenship.
• You must have paid pension plan premiums for six months or more.
• You must have never received pension benefits.
• You must not have a place of residence in Japan (you must have turned in your Alien Registration Card before applying).

Procedure
Before leaving Japan, you must obtain the claim form entitled "Request of Arbitration for Lump-Sum Withdrawal Benefit" (dattai ichijikin saitei seikyū-sho 脱退一時金裁定請求書). This form is available online and from the Social Insurance Office. After departing from Japan, you must fill out the form, attach the required documents, and mail them to:

Social Insurance Operation Center
Takaido-Nishi 3-5-24
Suginami-ku, Tokyo 168-8505 Japan

• Pension Book (nenkin techō 年金手帳)
• A photocopy of your passport (include the pages showing your name, date of birth, nationality, signature, and the date of departure from Japan).
• A document verifying the name of your bank, name of the branch office and its address, and account information (must be in your name).

It may take six months or longer for your paperwork to be processed. When the lump sum is remitted to your account, it will be converted to the currency of your country at the current exchange rate.

Should the applicant die before receiving the Lump-Sum Withdrawal Payment, a spouse, child, parent, grandchild, grandparent, or sibling, living off the same income source, or anyone who is considered to be a member of the same fiscal household at the time of the applicant's death can receive payment in place of the applicant.

Getting a Pension Refund (Tax Refund)

A 20% tax is imposed on the Lump-Sum Withdrawal Payment of your pension. However, you may also qualify to have the tax refunded. You must apply within five years of leaving Japan.

Procedure
In the case of the lump sum withdrawal, the money is deposited directly into a bank account that you specify in your home country. However, the refund on the 20% flat tax cannot be deposited into bank accounts abroad. Therefore, you must designate an acquaintance in Japan with a bank account. The money will be deposited into that person's account and then you can have that person send you the money.

Before leaving Japan, you should get a copy of the "Declaration Naming a Person to Administer the Taxpayer's Tax Affairs For Use by Aliens"(nōzei-kanrinin no todokedesho gaikokujin-yō 納税管理人の届出書外国人用) form. The form is available at the Kita Naha Zeimusho (North-Naha Tax Office). Fill out the form and submit it to the North-Naha Tax Office.

After leaving Japan, file for the Lump-Sum Withdrawal payment. Upon receipt of your payment, send a copy of the Notice of the Lump-Sum Withdrawal Payment (dattai ichijikin shikyū kettei tsūchisho 脱退一時金支給決定通知書) to your tax representative.

Have your tax representative go to the same tax office as before and file the Kakutei Shinkokusho (確定申告書) on your behalf. A bank account in Japan needs to be designated at the time of filing. The refund will be deposited into that account.

For more detailed information, please contact the Social Insurance Office in Urasoe.