Hikyojusha cannot claim a refund of withheld income tax basically
We have received a lot of queries from non-Japanese customers who were employed by Japanese companies before.
Of them there are queries about income tax refunds of “Hikyojusha (非居住者)”, whose literal translation is “Non-resident”. Some customers show us a sheet of payments for Hikyojusha, and ask us whether they can claim tax refunds of their withheld taxes. The shown sheet is called “Shiharai Chosho (支払調書)”, that employers issue for non-resident employees to prove how much they paid as a salary or remuneration and how much they deducted as a withholding tax (源泉徴収, Gensen Choshu). Tax rate of it is 20.42%, that is constant no matter how much employers pay.
In most cases when we look up such a sheet, we cannot help but answering our customers that no tax refund is expected.
Hikyojusha means a non-Japanese who stay in Japan without registering a Japanese address.
A large majority of them are travelers. But there are employees who have a short or spot contract with Japanese employers. They often don’t submit a registration of Japanese address so they are also Hikyojusha. Non-Japanese employees who have a registered Japanese address will also become Hikyojusha after they delete their Japanese address and leave Japan. Japanese employers deduct the income tax before they pay a salary or remuneration to non-resident employees. Its rate is 20.42% regardless of paid amounts.
..But some exceptions
Basically speaking, a withheld income tax of Hikyojusha’s salary or remuneration cannot get refunded.
However, there are two special ways for Hikyojusha to be exempt from or refund their income taxes:
- (1) Employers can submit a tax exemption form for employed Hikyojusha under a treaty regarding tax payments (租税条約). Japan has treaties with major countries to prevent taxpayers from paying their taxes twice for their same incomes, one in Japan and another in their home country (dual taxation problem). If Hikyojusha’ home country has this treaty with Japan and employers submit a tax exemption form to Japanese tax office, then they are exempt from Japanese income taxes. Of course they need to report their incomes in Japan to their home country when they submit their tax returns.
- (2) Hikyojusha can claim some exemptions for some kinds of taxes. “Taishoku Shotoku (退職所得)” is one of incomes that taxpayers can claim an exemption to some extent and reduce their taxes. Taishoku Shotoku means lump-sum payments for retired employees.
(1) is not, though, what the law forces employers to submit.
(2) is what Hikyojusha can claim if they designate a tax agent in Japan (personal agent or agent office). Pension’s lump-sum withdrawal payments are regarded as one of Taishoku Shotoku under Japanese income tax law, so their income taxes can be refunded to some extent. In fact almost all of 20.42% tax of pension’s lump-sum withdrawal payments are refundable through a tax agent.
For Detailed Information..
- Taxation for Non-resident [Japanese] (National Tax Agency, External Link)
- List of countries having a treaty regarding tax payments — Green countries have a treaty (National Tax Agency, External Link)
YouAT LLC gives you services for Japanese pension and tax refunds
We YouAT LLC has more than 10 year’s history to support non-Japanese employees’ “Lump-sum Withdrawal Payments”, “Old Age Pension”, and income tax refunds.
We have staff of Labor and Social Security Attorney, Administrative Scrivener, and Tax Accountant.
YouAT LLC website — > www.youat-jp.com/
Email –> firstname.lastname@example.org
(Oda Mitsuo, YouAT LLC)