How to pay taxes?
Income tax in Japan is based on a self-assessment system (a person determines the tax amount himself or herself by filing a tax return) in combination with a withholding tax system (taxes are subtracted from salaries and wages and submitted by the employer).
Thanks to the withholding tax system, most employees in Japan do not need to file a tax return. In fact, employees only need to file a tax return if at least one of the following conditions is true:
- if they leave Japan before the end of the tax year
- if their employer does not withhold taxes (e.g. employer outside Japan)
- if they have more than one employer
- if their annual income is more than 20,000,000 yen
- if they have side income of more than 200,000 yen
Employees, who do not need to file a tax return, will have their national income taxes withheld from their salaries by their employer, and an eventual adjustment is made with the year’s final salary. Prefectural and municipal payments have to be paid separately by the employee upon notification by the municipality.
People, who are required to file a tax return, such as self-employed persons, must do so at the local tax office (zeimusho) between February 16 and March 15 of the following year. The tax return for 2009 has to be filed between February 16 and March 15, 2010.