What's more daunting than filing taxes back home? Filing taxes in Japan. Where you may or may not speak the language or know the customs let alone tax laws.
When I first realized I had to file my own taxes here, I almost had a heartattack. Me? File taxes? in Japan?!
What do I do? How do I start? I had absolutely no clue. Luckily, one of my coworkers was an old pro and taught me how to do it and showed me the forms I needed. Saved my life!
So now I would like to pass on what I have learned and picked up from my own trial and error to you.
First, we'll take a look at the documents you need to file your taxes in Japan. Then we'll get into some of the other need to know deets.
Feel free to use the Table of Contents to skip down to the Step By Step Guide on Filing Taxes in Japan. Or check out my youtube video below.
Here's what you need to file taxes in Japan
Who needs to file?
So do you need to file taxes? Chances are you don't.
Most companies in Japan will file for you. They are likely taking money out of your check every month and will make adjustments towards the end of the year to ensure that you've paid the correct amount in taxes.
If you do need to file your own taxes, for the most part, the company you work for will let you know. Here are some other rules of thumb for determining if you need to file:
- You have more than one job
- Your employer does not take out taxes from your check (i.e. working for a foreign company/government, you are a nanny, etc.)
- You make more than 20,000,000 yen
- Your side hustle makes you more than 200,000 yen a year
- You have pension or retirement income not subject to Japanese withholding and is greater than 4 million yen
- You leave Japan before the tax year is over
Related: How to Save Money on Rent in Japan
Where do you file your Japanese taxes?
For those of you lucky enough to have to file your own taxes, you will need to go to your local tax office (zeimusho, 税務署) to do so. However, in some cases, you may be required to go to the prefectural temporary tax center as I am required to in my area.
You could potentially mail in your tax form but if you want to make sure it's done right, I'd go in and do it in person.
Note: I tried to go to the local office and they sent me straight to the big one. Not sure if it was because I was a foreigner or if it was because I wanted to write-off some of my taxes.
If you aren't sure where yours is, you could head over to your local ward office (区役所) and ask the people there. Or you could probably just Google it, and it should pop up.
If you are worried about your language skills, don't. When you go in person, (at least at the big prefectural center) there is always someone who speaks English and can help you.
Filing Your Taxes Online
As an alternative to filing your taxes in person (and if you are confident in your Japanese or can't be bothered to head down to the tax office), you could file your taxes online. Here's the E-Tax website.
For those of us unsure of our Japanese capabilities, there is an English manual that will help you through the online process. You can find that here. Also, here's the pdf file for 2019 Income Tax Guide.
In both cases, once you are done filing, the system will tell you exactly how much you will get back in your tax return. Pretty sweet eh?
Filing Dates & Deadlines
You may file your Japanese taxes between February 16th and March 15th give or take. The dates will vary a bit year by year depending on the day of the week that the dates fall on but it is typically from mid-February to mid-March.
If you decide to file online through E-tax, you can start filing as early as January 4th! And it is available until March 31st.
The Japanese tax year is from January 1st to December 31st. So when you file in February or March, you are filing for the previous year's taxes.
Be aware, if you owe money for you taxes, it must be paid by the deadline (March 15th).
Japanese Tax Rates
If you're going to be filing taxes in Japan, it would be nice to know what the tax rates look like here. And how they compare with your home country.
This is especially true if your home country and Japan have an agreement to prevent double taxation. If it does, you can choose where you will be taxed: in Japan or back home?
Knowing the tax rates help you make a wise decision about where you should file your taxes. The income amount listed below is based on your taxable income, which is your income minus all the deductions and exemptions.
*Note: If you obtain Permanent Residence in Japan, you will be taxed on ALL of your earnings no matter the country it is earned from. This includes income from investments and dividends.
If you are a non-resident or non-permanent resident, you will only be taxed on the income made in Japan.
Japanese National Income Tax Rates
Income (yen) | Tax Rate |
|---|---|
< 1,950,000 | 5% |
1,950,000 - 3,300,000 | 10% |
3,300,000 - 6,950,000 | 20% |
6,950,000 - 9,000,000 | 23% |
9,000,000 - 18,000,000 | 33% |
18,000,000 - 40,000,000 | 40% |
> 40,000,000 | 45% |
* If you are self-employed (i.e. running a business), there is an extra tax called the Enterprise Tax. This tax will be between 3 to 5% of your income and is based on the kind of business you have.
The Prefectural & Municipal Tax (City Tax)
In addition, to the national income tax, there are prefectural and municipal taxes sometimes referred to as the city tax.
It is similar to the National income tax in that it is based on your taxable income from the previous year. But unlike the national income tax, this tax bill usually comes mid-summer.
You can choose to pay this tax in one lump sum payment or in 4 quarterly installments. I have heard from a friend if you pay the lump sum, you get a bit of a discount in the form of money back later but I haven't tried this myself so I'm not sure it will work for everyone.
The Prefectural Tax rate is 4% on all taxable income. And the Municipal Tax rate is 6%.
The more expenses and write-offs you have, the lower your city tax will be.
How to Maximize Your Japanese Return
The short answer? Claim all the deductions, credits, and exemptions you can! Did you know that if you use your house for business you can write off up to 1/3 or you rent and utilities?
See what other deductions you can take advantage of below.
Also, be sure to check with your home country. Because it may be more beneficial for you to pay taxes there rather than filing taxes in Japan if the taxes are lower.
Credits, Deductions, and Exemptions
This is the good stuff. Use these credits, deductions, and exemptions to reduce the amount of taxable income you have and increase your tax return.
Credits
Foreign Tax Credit
If you are paying taxes in your home country on the salary you make, you can take the foreign tax credit. How much you can take is determined by their formula. See the NTA site for more information.
Furthermore, some countries have treaties with Japan so if you pay taxes back home you may not be subject to taxes here. Check to see if your country has a treaty with Japan and the details of it on the Ministry of Finance website.
Here's a list of other credits you may qualify for:
- special improvements to your home such as earthquake improvements, etc.
- donations to political parties
- new building or certified house credit
- credits for special donations to certain associations or NPOs.
Exemptions
If you have dependents such as children, elderly parents, or disabled relatives that you are supporting, you can claim exemptions for them whether they live with you here in Japan or not.
To claim this exemption, you will need to send in supporting documentation showing that you are related and that you have been sending money home to cover living or educational expenses.
These documents may need to be translated into Japanese.
Deductions
As someone who is considered self-employed in the eyes of Japanese tax laws, you can really save yourself some good money by taking full advantage of all applicable deductions.
Below is a list of all the possible deductions you could take. Make sure you only take the ones that actually apply to your situation. Remember these are deductions for expenses related to your business.
I don't know how they do it here, but I'm guessing you don't want to end up on the wrong side of the Japanese law.
Deductions* | ||
|---|---|---|
Housing | Up to 1/3 of your rent, land etc. (*if used for business) | |
Utilities | Up to 1/3 of your electricity, water, gas | |
Travel Expenses | Train/bus fare, hotel stays, gas, etc. | |
Communications | Phone bills, Internet services, Computer, etc. | |
Advertising | Flyers, advertisements in newspapers, etc. | |
Entertainment | Eating out with clients, drinking, trips, etc. | |
Maintenance and Repair | Car, office building, etc maintenance and upkeep | |
Depreciation | Depreciation of company assets, i.e. buildings, cars, etc. | |
Consumable Supplies | Office supplies, furniture, etc. (things used in business) | |
Welfare | Social insurance, medical expenses, hygiene, etc. | |
Casualty Insurance Premiums | Fire insurance, earthquake insurance, etc. | |
Packing and Freight Charges | Postal fees for sending merchandise, costs to buy packaging, etc. | |
Interest Paid | Interest paid on loans, discounts on notes receivable, etc. | |
*All of these deductions are for business expenses not personal expenses.
Special Employment Income Deduction
Believe it or not, everyone gets a deduction for their employment income. For anyone making less than 1,619,000 yen, you can subtract 550,000 yen to arrive at your new employment income.
But for those making more than that, you'll have to use their formula to calculate your new income total. I've included just a few key salary ranges in the table below.
Total Income (yen) | Calculation For New Income (A = Total income) | |
|---|---|---|
1,800,000 - | (A/4) * 2.8 - 80,000 | |
3,600,000 - | (A/4) * 3.2 - 440,000 | |
6,600,000 - | A * 0.9 - 1,100,000 | |
> 8,500,000 | A - 1,950,000 | |
A Note about the Deductions
Just like when filing taxes back home, you'll want to make sure you keep your receipts for any deductions you claim. From what I've heard, you need to keep them for at least 3 years.
But just to be on the safe side you may want to keep them for up to 6 years.
I know in America they can audit you up to 7 years back if they find errors in your taxes. And if there are really big discrepancies or illegal activity, I believe they can go back forever.
If you use your house for your business, you can write-off up to 1/3 of your rent and utilities!
Step By Step Guide
This step by step guide is for filing your taxes in person. Most of this is from my experience at my tax center. Your experience may be slightly different depending on where you are located in Japan.
At the big temporary tax center I go to, there are about 6 'stations' you'll have to go through. A lot of it is waiting. But no worries, I'll go through them all below.
1. Gather all necessary documents
- Your My Number Card
- Gensenchoshuhyo (for all jobs)
- Your Bank Book
- Expense Receipts (Although they've never checked for mine, you never know.)
- (Optional) Health insurance premiums documentation
Before you leave your house, you'll definitely what to double check that you have all of these necessary documents because... what's worse than taking two hours out of your day to file Japanese taxes?
Having to file them twice. You, definitely, do not want to do this. Believe me. Been there. Done that.
Pro tip: Calculate out all of your expenses ahead of time and bring that sheet of paper with you. That way it doesn't take you ages to do so at the tax office.
2. Head over to your tax office & take a number
There are usually tons of people filing their taxes on any given day so be prepared to have to take a number and wait.
When you arrive at the tax center (after taking a number), you need to choose the appropriate file folder for your taxes. Then take a seat and wait for them to call your number. They also show the numbers on a screen so you can just look there.
At my center, the file folders are color coded so they know which people are filing simple individual tax returns, versus people who have purchased homes, or people who have real estate as investments, etc.
*Photo from GaijinTax.com (which may no longer be in existence)
3. Fill out your form
In orderly Japanese fashion, they'll have you stand in another line once your number is called. Usually by this point, someone will have asked you if you need English assistance.
And if that is the case, they will have their resident English speaker ready to help you fill out your tax form (pictured above).
Eventually, you'll be given your own little 'booth' complete with pen, calculator, etc so you can begin filling out your form.
Now's the time to take out your Gensenchoshuhyo and start filling in the details of how much you made this year.
Helpers will be walking around so if at any time you have a question, you can put up the question mark sign (they have a place to hang your sign from your booth). And someone should come help you. You could try a good ole "Sumimasen" to get someone's attention as well.
Of course, if you have an English helper, they will stay with you the whole time (assuming there's no one else who needs English assistance). This could actually help you get in and out a lot faster as you won't have to wait until someone comes to answer your questions.
When filling out your form, be sure to press down hard enough for the carbon copies to be made. You'll get a copy once you finish.
Here's the 2019 Guide which includes a step-by-step breakdown of each part of the form in English if you need it. Or you could use the picture above as a reference while you fill it out. That's what I do.
4. Get a card for the computer
After you finish filling out your form, someone will come around, check it, and staple all your paperwork together. Then you'll enter another seating area.
Here you'll get a little computer card that will be for your taxes and that you will use to 'clock in' to your computer. Then take a seat because you must wait again until they call you up to get in line to use a computer.
5. Computer time
Here's where you're gonna need to whip out your Gensenchoshuhyos for all your jobs again. This time you have to enter in the total amount paid to you by each company as well as the total tax withheld from your salary.
You'll also need the address of your companies as well as some other details (which should be on your Gensenchoshuhyo). These details will most likely be written in Japanese so get one of the helpers to read it out to you if necessary.
Next, you'll copy the total amount of expenses you are writing off into the appropriate section.
The computer part is pretty straight forward but can be confusing if you don't understand Japanese. At this point, I usually just have the helper make sure I'm putting things in the right places.
Once you finish entering all of your information, you'll have to choose a password. You'll have to remember this for next year so choose it wisely. The final screen will show you exactly how much your tax refund will be.
Come on, big money, big money, big money...
6. Print your documents
At this station, you'll be printing out everything you just put into the computer. This is why they gave you that computer card a few steps ago. It's all starting to make sense now, eh?
So print your documents then have the people check them, staple them together. And you'll be on your way to the final step.
7. One more final check
It wouldn't be Japan without check after check after check. So naturally it is the same when you are filing your taxes.
After everything is all said and done, you'll go to one more person who will check all of your documents to make sure everything is completed.
Then they'll give you an envelop to keep your documents in for your files plus the other documents for the city that you must drop into the appropriate box before you leave.
Once you do that, you can head on out. The money for your tax return should be deposited directly into your bank account about a month later.
Congratulations! You did it!! Japanese taxes - done and done!
Now, was that so bad?
Notes:
If it is your first time filing your Japanese taxes, be sure to keep the print out copy of your return for next year. This is because it will have your password on it that you will need every year. Also, it is good to keep for your records.
Also, if you realize that you made a mistake on your taxes later, not to worry. You can come back and correct your tax return if necessary.
I did that the first year because I didn't realize I could write off insurance premiums and had forgotten how much I paid for it. It was much faster the second time around but it still could take a good chunk of your time.
If you make a mistake, you can always go back and correct it, within the filing period!
All in All
Filing taxes in Japan is just like filing taxes anywhere else in the world except maybe a bit more orderly. Plus with a few insider tips, you can find out how to substantially reduce your taxable income and receive much bigger returns.
I hope this guide has helped you feel more confident about filing your taxes in Japan.
If you have any more tips and tricks for saving money on taxes in Japan, I'd love to here about them! Also, I'd love to hear about your experience with filing your taxes! Feel free to message me or write it in the comments below!
*DISCLAIMER: The Information provided in this post is simply the opinions of the blogger and is given in the spirit of educational fun. It is not investment advice. Please do your own research and decide what is right for you before investing in any asset. If necessary, seek the help of a certified professional in discussing your options.