FAQ about resident tax in the final Japanese year
Japanese residents needs to pay resident tax (住民税, Jumin-zei. also translated as inhabitant tax) to local governments where they reside, that is, one to the prefecture (都道府県, Todofuken) and another to the city (市, Shi) / the town (町, Machi / Cho) / the village (村, Mura / Son). You pay this resident tax from your salary with Gensen Choshu (源泉徴収), a withholding by the employer. Details of Japanese resident tax are shown on this article.
We often receive queries from our customers like that:
This year I ended my employment in a Japanese company and left Japan. After some months I received a payment slip of a resident tax to my old Japanese address from the city (town, village) office, whose amount was surprisingly big.
Answer to FAQ
We’d like to answer these questions:
By Japanese tax code you need to pay it.
It is the rule that your resident tax is withheld from your salary (Gensen Choshu). However, for the year you end your employment this rule is not applied and you need to pay it by yourself.
Some employers also deduct final year’s resident taxes from employees’ retirement payments. In that case you don’t have to pay your resident tax anymore because the employer pays it on behalf of you.
But other employers don’t deduct them, and leave the obligation of paying final resident taxes to their employees. In that case the city (town, village) office send you the payment slip to your address (oversea if you already leave Japan). If you don’t pay it then you will be registered as a person who has an overdue tax payment. You will be obliged to pay it with a penalty charge when you come back to Japan and resume a residency here.
So it would be better for you to pay it if you plan to come back to live in Japan(*). While you are out of Japan you can designate your tax agent and let him / her pay it.
(*) If you have an income from inside Japan or you leave assets in Japan, then unpaid resident taxes will be seized and taken from them. Above all Japanese tax office will seize income tax refunds before you receive them.
The amount of resident tax in this year is decided according to your income in the previous year. So you need to pay it fully even if you leave Japan on the halfway of this year. You shall pay it to the city (town, village) and prefecture where you resided on January 1st.
To take it from the reverse side, what happens if you start a life in Japan after January 1st has passed? In that case you don’t have an obligation to pay this year’s resident tax (*). Or you will pay this year’s resident tax only little if your previou year’s income was a small amount.
(*) But a cheating won’t be allowed by the city (town, village) office. For example: to get out of Japan only for a few days around January 1st, or to register your residence after January 1st even you have the fact to have lived in Japan on January 1st or before.
The system of Japanese resident tax is set like that because people can change their address in Japan within one year. For non-Japanese employees, please take notice of the resident tax in your final Japanese year.
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)