Japanese Resident Tax – What percentage of income?
In Japan there are two kinds of taxes for a personal income – (national) income tax (所得税, Shotoku-zei) and resident tax (住民税, Jumin-zei. also translated as inhabitant tax).
Japanese residents pay resident taxes to two levels of local communities – one to prefectures (都道府県, Todofuken) and another to cities (市, Shi), towns(町, Machi / Cho), and villages (村, Mura / Son)(*). You pay your resident taxes not to the communities where you are employed, but to the ones where you reside.
(*) In Tokyo Metropolitan area lower communities are called wards (区, ku). Tokyo Metroplitan wards are different than wards in other cities and have their own local offices and local parliaments.
On Gensen Choshu-hyo (源泉徴収票, certificate of annual withheld tax and social security payments) you can see only income tax but cannot find resident taxes. However, employers also withhold employees’ resident taxes from their salaries, and they send collected taxes to local communities. This system is called “Tokubetsu Choshu (特別徴収)”, special collection method (of resident taxes). The total tax rate of resident taxes is approximately 10% of (adjusted) incomes (*).
(*) Low-level earners are exempt from paying part of or all of resident tax, though.
So in reality a considerable amount of resident tax is being withheld from employees’ salaries.
Can’t get refunded?
You might have a chance to claim a refund of your income tax shown on Gensen Choshu-hyo, under some conditions such as the final year of an employment (please see this article).
But basically you cannot claim a refund of resident taxes.
The amount of resident taxes are calculated from the previous year’s income. In the end of each year employers report their employees’ incomes to the national and local governments via the Gensen Choshu system (except for employees whose annual incomes are over 20 million yen). So even in their final employment year Japanese employees’ resident taxes are already decided on the basis of the previous year’s incomes.
But if you had items that could apply a tax exemption in the previous year or before, like medical payments, you can submit your Kakutei Shinkoku (確定申告, tax return) by yourself. In this case you can receive an income tax refund of the previous year or before. Following it you might be able to receive a refund of resident tax too.
There is another important topic for Japanese resident tax. It is that you will have a responsibility to pay it if you have a Japanese address on January 1st of each year, but if you don’t have a Japanese address on January 1st then you won’t have to pay it for one year. For this topic we will have another article later in this blog.
For Detailed Information..
- Metropolitan, Ward and Municipal Inhabitant Tax on Individuals (Tokyo Metropolitan Bureau of Taxation, External Link)
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