日本 雇佣指南

Important Information About Taxes and Social Security in Japan

Personal Income Tax (PIT) for Permanent Residents and Non-Residents

Permanent resident taxpayers in Japan are taxed on their global income. Non-resident taxpayers are taxed only on their Japan-sourced income. Non-permanent resident taxpayers are taxed on their income, other than foreign-source income that is not remitted into Japan. They can be taxed on part of foreign-sourced income that is paid in or remitted to Japan.

For example, a single taxpayer with a taxable income of ¥8 million would fall in the 23% tax bracket and pay ¥1.204 million in taxes (¥8M x 23% = ¥1.84M – ¥0.636M = ¥1.204M).

Calculating Local Income Taxes

Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income. This is collectively known as residence tax or inhabitant tax (‘jumin-zei’). In total, this amounts to 10% (6% prefectural and 4% municipal) of the taxpayer’s taxable income from the prior year. This applies when the taxpayer is a resident of Japan as of January 1 of the current year. For local inhabitant’s tax purposes, an equalization per capita tax is also assessed. The standard annual amount is JPY 5,000 but this may vary based on the prefecture or municipality in which the taxpayer resides. Local inhabitant’s tax is not deductible.

Non-Residents Employment Income Subject to Tax

A non-resident taxpayer’s Japan-sourced compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available. This rate includes 2.1% of the surtax mentioned previously (20% x 102.1% = 20.42%). A non-resident taxpayer may be subject to the local inhabitant’s tax at a rate of 10% if they are registered as a resident as of January 1 of the current year.

Deductions Allowed For The Calculation Of PIT

Earned income deduction: A resident taxpayer who earns income from employment is eligible for an earned income deduction for the purposes of both national income and local inhabitant’s tax. The amount of the deduction is based on the amount of the employment income and is determined by reference to a deduction table.

Personal deductions: Interest is not tax deductible. Japanese social security contributions are fully deductible. Medical expenses, regardless of where they were paid, are tax deductible. There are certain limitations.

Charitable contributions: Charitable donations designated by the Ministry of Finance in Japan are tax deductible, with certain limitations. Qualified contributions or donations that total over JPY 2,000 are deductible in calculating the national tax. The total deduction is limited to 40% of income or less than JPY 2,000. The definition of a qualified contribution is specific and very restrictive.

Life insurance premiums (or private pension): Premiums paid to a Japanese agency in local currency are deductible to a limited extent in computing national and local inhabitants taxes.

Earthquake insurance premiums: Premiums paid for earthquake insurance are deductible for the purpose of both national and local inhabitant’s tax to a limited extent.

Mortgage deductions: Mortgage interest is not tax deductible in Japan. However, a tax credit on housing loans may be available for up to ten years when certain conditions are met. The total amount of tax credit is determined by the year in which the taxpayer started living in the property as well as mortgage balance at the end of the tax year.

Personal deduction: Resident taxpayers are entitled to a personal exemption for themselves and their dependent spouses This is set at JPY 380,000 for national income tax purposes and JPY 330,000 for local inhabitant’s tax purpose.

Business deductions: Business expenses are tax deductible in some limited cases. An employer’s reimbursements of business expenses (such as moving, travel and entertainment expenses) do not constitute taxable income to the employee. However, these expenses must be required for the employer’s business.

PIT: Employer Requirements for Withholding Income Tax & Year-End Adjustments

Withholding income tax at source:

Employers who pay income subjected to withholding at source must pay the taxation office the amount of tax withheld at source no later than the 10th day of the month following the month that the income was paid. Regarding paying withholding tax on residents’ salaries, a special measure is provided for small businesses with fewer than 10 persons on the payroll. This allows them to pay withholding income tax in six-month installments. Alternatively, they can twice a year (by July 10th and by January 20th) with professional fees added..

Year-end adjustment on withheld income tax:

The year-end adjustment is for the calculation of the income tax done by the employer. During the year, employee tax is withheld each month from the employee’s salary. This is based on the rates published by the tax office. At the end of the year, the exact tax liability of the employee is calculated based on his her special situation. This may vary depending on circumstances, such as the number of dependents. An adjustment is made so the total amount of tax withheld during the year equals the tax liability of the employee. The amount of tax withheld from employees is reported annually in the withholding tax report (‘Gokeihyo’) filed in January.

Employers’ Responsibilities Regarding Social Insurance

Japan has four different kinds of insurance systems, which companies are legally obliged to take part in. All workers that meet certain criteria are covered by the insurance.

1. Workers’ Accident Compensation Insurance: covers any illness or injury at work or while commuting to/from work.
2. Employment Insurance: provided to workers who become unemployed. This helps to maintain stable employment, such as providing financial aid and subsidies.
3. Health Insurance and Nursing Care Insurance: covers medical and nursing care expenses incurred by workers.
4. Employees’ Pension Insurance: provides benefits for old age, death or disability.

Employers who have >101 employees need to enroll part-time employees in social insurance coverage.

*The above table serves as a broad guideline. Actual rates charged by GoGlobal will differ. 

Workers’ Accident Compensation Insurance and Employment Insurance are collectively known in Japan as labor insurance. Health, Nursing Care and Employees’ Pension Insurances are collectively referred to as social insurance.

A company must enter these insurance systems when first incorporating or hiring staff by submitting labor and social insurance notification forms to the relevant authorities. The company usually pays insurance premiums by deducting the portion of the premiums payable by employees from their wages and paying these together with the portion of the premiums payable by the employer to the applicable authorities.

Social insurance premiums are deducted from a worker’s monthly salary. Pension and health premiums are calculated as a percentage of the ‘standard salary.’ Standard salary is determined by first taking the average compensation of the three previous months. This average is then applied to a standard salary table that outlines a single amount. This is called the ‘standard salary’ for any salary in that taxed range. The standard salary is capped. The maximum standard salary is JPY 650,000 for pension and JPY 1,390,000 for health. Unemployment and workers’ accident compensation insurance premiums are calculated as a percentage of the actual compensation instead of the standard salary.

Bonus payments are subject to the above insurances. However, specific rules apply depending on the frequency and regularity of the payments. There are also annual caps placed on premium payments pertaining to bonuses.

Rules Regarding Pension Insurance Contributions

All residents contribute to pension insurance. This premium is revised every April and is determined by factors such as price fluctuation and real wage index. Salaried workers under the age of 70 pay a percentage of their standard salary. The premium for salaried workers is 18.30%, paid half by the employer and half by the employee.

The pension benefit is paid once the insured individual is 65. They must also be unemployed and have paid pension premiums for at least 10 years. The benefit amount will depend on the individual’s total contribution.

Non-Japanese workers who have lived and worked in Japan for less than 10 years may apply to claim a lump sum payback on their national pension when they leave Japan and will no longer be eligible for Japanese pension benefits. However, this only applies for those who have been covered by employees’ pension insurance for at least six months. The application must be sent within two years after leaving Japan.

Employers pay a child allowance premium (0.36%) along with the pension premium. This premium funds the government program that administers a childcare allowance to Japanese residents with children.

What to Know About Health Insurance and Long Term Care Insurance in Japan

Health insurance provides medical coverage for all insured residents. Long-term care insurance provides elderly care benefits. It also administers allowances in cases where the insured individual experiences childbirth, injury, sickness and death. National health insurance in Japan insures non-salaried residents under the age of 75. Employees’ health insurance covers salaried workers under 75 of years of age as well as their dependents under 75. Upon turning 75, both non-salaried and salaried persons will become insured under the Latter-Stage Elderly Healthcare System.

National Health and Employees’ Health insurances cover 70% of medical expenses for persons under 70 and for those who are 70 to 74 with a standard salary of JPY 280,000 or more. Otherwise, the government covers 80% of medical expenses for those who are aged 70 to 74 with a standard salary below JPY 280,000 and 90% for those over 75. If the total monthly medical costs of a household exceed a certain threshold, the exceeded amount will be reimbursed. The maximum threshold is determined by the insured person’s compensation and age.

Like pension, Employees’ Health insurance premiums are calculated based on standard salary. The percentage depends on the employer’s registered prefecture. For example, Tokyo’s rate is 10%, with half paid by the employer and half by the employee. Persons ages 40 to 64 are subject to an additional 1.8% premium on top of their health premium for long term care insurance. The employer and the employee each pay half.

Japan’s Parameters for Eligibility and Receipt of Unemployment Insurance

Unemployment insurance provides allowances for unemployment, childcare and family care leave.

The length of time for receiving unemployment allowance depends on age, termination reason and the period for which one has paid unemployment insurance premiums. The waiting period for the first allowance payment is four weeks if the company has terminated the employee. If the employee quits on his or her own accord, there is a waiting period of up to three months. Allowance is paid monthly following the waiting period, provided the person can prove they are actively searching for a job.

Representative directors are not eligible for this insurance, as they are not engaged by an employment agreement. Rather, they are covered under a service contract. Directors serving on the board of directors are also not eligible for this insurance. However, directors who simultaneously function as an employee, such as a high-ranking employee with a title like department head, are eligible.

The premium rate varies according to the employer’s industry type and the employer is responsible for paying a greater percentage than the employee. For example, if an employer is in a general industry type (meaning the employer is not in agriculture, forestry, fishery, sake production or the construction industry), the employer will pay a 0.60% premium and the employee 0.30%.

Rules About Eligibility and Receipt of Workers Accident Compensation Insurance

Worker’s accident compensation insurance provides medical care allowances for work and commuting-related injuries, diseases and deaths. It also provides compensation allowances for unpaid medical leave periods exceeding four days.

The same rule of exception applies for directors as with unemployment insurance but there are two ways in which representative directors and directors may become eligible. One way is to apply for special enrollment, which has several requirements such as industry type and number of employees. The second way is to gain unemployment insurance eligibility as a director who simultaneously serves as an employee. Representative directors are not eligible for unemployment insurance and will therefore not qualify for this second method.

Premiums are covered by the employer. The rate, which depends on the employer’s industry type, can vary from 0.25% to 10.3%. Common industry types are finance, insurance and real estate (0.25%), warehousing and security (0.7%) as well as wholesale/retail trade, restaurant, and lodging (0.4%).

Employers pay an additional 0.002% premium for asbestos insurance, which funds healthcare relief for asbestos-related injuries.

Alternative Health Unions Available to Employers in Japan

While most employers register with public health insurance, alternative health unions exist for particular industries. In this case, employers will opt out of the standard health insurance scheme. Premiums are usually cheaper and the benefits are at a higher level than the standard scheme. Employers can only enroll if certain requirements are met.

Employers can also enroll in a pension fund, which provides employees with enhanced pension benefits upon reaching pensionable age.

Availability of Pension Funds and Supplemental Insurances in Japan

401K: Most employers simply use the government pension scheme, but some multinational companies will employ an equivalent of a 401K plan in Japan, managed by a third party. The employer would set the thresholds and matching scheme and engage a third party. Typically, there are minimum headcounts required to employ such a plan in Japan.

Most smaller MNC employers do not provide supplemental insurances since the standard insurances cover most items. However, some larger MNCs do provide life insurance/top up insurance and travel insurance. Directors and Officers Liability (D&O) Insurance is common as well for senior executives.

Other Employer Tax

Business facility tax is levied on employers of locals and ex-pats. The tax rate is 0.25% of the worker’s monthly salary.