Taxes in Japan include national taxes collected by the national government and local taxes collected by prefectural and municipal governments.
Income tax, corporate tax, inheritance tax, consumption tax
● Prefectural Taxes
Prefectural residents tax, automobile tax, local consumption tax
● Municipal Taxes
Municipal residents tax, property tax, light vehicle tax
Note: For inquiries about national taxes or prefectural taxes, contact the National Tax Agency or a prefectural taxation office respectively.
Those who have sources of income, such as paychecks, are required to pay income tax. The amount payable is determined by the amount of income received during a one-year period between January 1 and December 31.
There are two methods of paying income tax:
1. Tax withholding
The amount of tax payable is deducted from your income and paid monthly to the government by your employer (this is known as tax withholding). A year-end tax adjustment will be performed every December to determine whether you have overpaid or underpaid your taxes from January to November. If you had overpaid, the surplus will be added to your paycheck for December.
2. File a tax return
If you do not have an arrangement with your employer to perform tax withholding or a year-end tax adjustment, you will have to file a tax return by yourself. To file your tax return for the year you have worked, submit the necessary documents to the tax office of your local ward between February 16 and March 15 of the following year. You may make payments at convenience stores, banks, post offices, or online.
Residents Tax (Individual Municipal Residents Tax and Prefectural Residents Tax)
What is Residents Tax?
Individual Municipal Residents Tax (市民税// Shiminzei) and Prefectural Resident Tax (県民税//Kenminzei) are collectively known as Residents Tax (住民税//Jūminzei), and are paid together.
Individual Municipal Residents Tax + Individual Prefectural Residents Tax = Residents Tax
Residents Tax is paid by everyone who has an address in Japan as of January 1 of that year and who earned an income the previous year. The amount of Residents Tax you pay is made up of a flat rate (均等割//Kintō Wari) and a rate based on your income from the previous year (所得割//Shotoku Wari).
Residents Tax = Flat rate + Rate based on your income from the previous year
For more information, see the City of Hiroshima website (https://www.city.hiroshima.lg.jp/soshiki/26/199970.html) or contact contact the Municipal Resident Tax Section of the tax office or tax room in charge of your local ward.
How to pay your taxes
There are two methods of paying tax:
1. Your employer subtracts the amount of tax you owe from your income and pays it to the City.
2. You pay taxes by yourself. The City will send a notification to those paying via the ordinary collection method; confirm the contents of the notification and pay your tax by the due date.
What happens if you don’t pay your taxes?
If you do not pay your taxes by their due date, you will be required to pay not only the taxes you should have paid, but also late payment charges. The City may also take proceedings against you for the recovery of unpaid taxes by seizing possessions, including your salary. Pay your taxes by the due date to avoid this.
For further information, see the City of Hiroshima’s website https://www.city.hiroshima.lg.jp/site/english/18862.html, or contact the relevant division of the Payment Department that deals with your ward.
📝 Income Tax Convention
If your home country is part of the Income Tax Convention (a formal agreement between countries covering tax issues)with Japan and you are an exchange student or vocational trainee (those undertaking training in a company/private sector) etc., you might be exempted from income tax and/or residents tax. You must fulfill certain criteria to be exempted, and you must apply separately for exemption from income tax and residents tax. Please be aware that you cannot be exempted from residents tax if you only apply for income tax exemption.
The amount of tax payable will depend on the following factors:
1. Environmental performance
Taxes related to environmental performance are often paid in addition to what the car costs when purchasing a car.The amount payable depends on the type of car purchased and other factors.
2. Vehicle type
Taxes related to vehicle type are to be paid by the car owner on April 1 of each year. The amount of tax levied is calculated based on the engine displacement of your car.
Engine displacement > 660cc – Vehicle Tax
Engine displacement ≦ 660cc – Light Vehicle Tax The tax notice will be sent to you by the City or the prefectural office around April or May of each year. The notice will indicate the payment due date and amount of tax payable, which depends on the type of car you own and other factors. You can make payment at convenience stores, banks, post offices, or online by the indicated due date. You may also pay by credit card or via smartphone payment apps.