With the filing deadline for Japanese tax returns less than two months away, there has never been a better time to brush up on the basics.

While a number of foreign residents may be lucky enough to have their companies file on their behalf, those who are self-employed, or are employed by a company based overseas are required to follow a series of steps to pay income tax.

REThink Tokyo has combined with PLAZA HOMES to put together a guide of what residents need to know.

Who needs to pay taxes in Japan?

If you’ve had some type of income in Japan, chances are you owe the Japanese government. Three categories exist for compulsory tax payers: Residents, Non-Residents, and Temporary Residents.

Residents

These are people who have a domicile in Japan through ownership or rental for one (1) year or more. Additionally, if your employment contract expresses a term of a year or more, you may be considered a resident with or without a listed domicile. Residents are also taxed on their income worldwide.

Non-Residents

These are people who are not domiciled in Japan. Even if you do not live in Japan, any income earned in the country is subject to taxation. However, if you are domiciled in Japan for five years or less and you are not a Japanese national, you are considered a non-resident. Please be aware of the above. If you have an employment contract that has a long term, you may be subject to taxation. And as below, money brought into Japan will be taxed.

Temporary Residents

These are people who come to Japan and work temporarily outside of Japan while being on a foreign payroll. Income from overseas that is not remitted to Japan is exempt from taxation. However, if income is transferred into Japan for any reason, such as to pay for a bill or goods, or even into a Japanese bank, then that remitted money is considered taxable income.

Which forms are needed to file your taxes?

For the majority of filers, form A will suffice. Form A is for individuals with taxable income in Japan.

If you have any income from real estate, investments, or business operations, Form B must be filled out and attached.

Around December (or sometimes August), your withholdings tax slip is provided to you by your employer or mailed to the address that you registered with the municipality you are domiciled.

If you do not have this slip in your possession, you should make a trip to the city hall in the municipality of your registration.

When to pay taxes

If you are required to pay taxes beyond the amount withheld by your employer, Japan’s national income taxes are due in full by the March 15 deadline of the following year.

Prefectural and municipal income taxes may also be required if not withheld by your employer and are to be prepaid quarterly if filing Form B.

If you have any questions about taxes and Tokyo property, contact PLAZA HOMES via the details below.

Click here for information about property tax.

Source: PLAZA HOMES

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