Tax season has come! Here in Japan each individual is required by law to file income tax declaration (return) if applicable. This is true for foreigners who have income in Japan. The period is from February 16 to March 15 (subject to change due to weekend).
During this period, you are required to declare your income to local tax office and pay income tax. For this year, for example, you are required to pay income tax for CY2023 between February 16 and March 15 in 2024. If you are late, penalty fax will be imposed. So be careful.
This article is a step-by-step guidance for foreigners trying this for the first time. Please also note that description below is intentionally simplified for easy reading but should cover most cases. For rare cases, you should consult with tax professionals.
目次
Step 1: Determine applicability
Some foreigners are required to pay income tax while others are not. Take a look at the picture below to determine if you need or not need to pay income tax in Japan.
If you are not resident in Japan or do not live in Japan more than 1 year, you do not need to pay income tax. If you are not employed and run your own business, then you need to pay income tax for yourself. If you are employed and the employer competed a procedure called 年末調整 (year-end adjustment), it means the employer deducted income tax from your salary and paid on behalf of you already.
Even if you are employed, you need to submit income tax declaration when your total salary last calendar year is greater than 20,000,000 yen. “Total” means it is aggregated amount if you have salary in both Japan and your home country. If you do not get paid in Japan and receive salary only in your home country, the same logic will be applied.
Step 2: Read through the official guide
National Tax Agency (NTA) issues their official guide for foreigners who file declaration (return). It is recommended to take a look at documents posted in below website.
2020 INCOME TAX AND SPECIAL INCOME TAX FOR RECONSTRUCTION GUIDE
https://www.nta.go.jp/english/taxes/individual/incometax_2020.htm
This covers all the detailed procedure and tax calculation. But as you see, they are quite a volume and complex because they refer to all the corner cases. As a busy person like you, you may not have time to go through everything. If so, you would better ask assistance to Tax Accountants (Zeirishi 税理士). Funatsukaikei Tax Accounting (税理士法人船津会計）will help you to file tax return form as well as its related procedures.
Please contact us through inquiry form below. English speaking tax accountant (Shigeo Koike) will be available to help you.
Step 3: Prep well before working on the declaration (return) form
If you are employed in Japan, your employer should provide you with a withholding tax slip (源泉徴収票) early in January. This is an important reference to fill in the form. Please make it ready. If you lost it, go to your employer and ask to re-issue.
If you run your own business in Japan, then you need to prepare additional financial statements (P/L and B/S). If your business is simple enough, you can create them for your own but otherwise, strongly recommend to work with a tax accountant to avoid mistake that could lead to penalty tax. Your tax accountant may request you to file an additional form for blue return (青色申告) because it gives you some tax benefits. But please note blue return will be effective from the next year of submission. If you submit blue return application by March 15 2021, you can enjoy the tax benefit from the next year (CY2022).
Step 4: Fill in and submit tax declaration (return) form
If you decide not to use a tax accountant (Zeirishi) and work for your own, you need to fill in the form like below. Unfortunately there is no English version.
(Source: NTA website)
I personally think NTA should have English version but they do not at lease for 2018. By using the English guide above, you can fill in necessary data cells. But it is better to work with someone who have the experience to fill in this form before. Some of the data cells are hard to understand even for Japanese.
This form can be prepared and submitted online through the website below, but again they have Japanese version only.
国税庁 確定申告書等作成コーナー (entry page for online tool)
https://www.keisan.nta.go.jp/kyoutu/ky/sm/top#bsctrl
Also this web tool requires an off-line application to have your ID and password. You need to physically report to local tax office nearby and ask them to issue ID and password. But once you have them, the same ID and password can be used every year and you do not need to stand in long line at tax office. So I recommend you to take this.