Japan 2009 Income Tax and Japanese Tax System

by ebazaar 18 June 2010 No Comment

Almost every nation has their taxes to pay, including Japan. The national Japanese domestic tax system is administered by the National Tax Administration in Japan, a semi-independent body of the Ministry of Finance, of which oversees a total of 12 regional taxation bureaus and 517 local tax offices. Whereby their tax policy and international tax negotiation are handled by an internal bureau of the Ministry of Finance called Tax Bureau. However, for tax matters, a general framework is established by the Local Tax Law, which is overseen by the Local Tax Bureau of the Ministry of Home Affairs. The type of local taxes that can be imposed and their rates are regulated by the national government.

Japan Income Tax

Japanese Tax System

Taxes or what the Japanese called as sozei seido is progressive, which means the higher the income, the higher is the rate of tax payable. It is also based on self-assessment whereby the respective company must file a tax return to the tax office (within 2 months of the end of their business year), and the same goes to individuals, though most individual do not to file their tax return provided that they have received only remuneration income or almost all of it from the same employer. It is the responsibility of their employer to calculates their tax amount, which is withheld at source and makes a year-end adjustments, either collecting additional or refunding tax to the taxpayer. National income tax is usually paid and due in full by March 15 of the following year if not withheld by employer, with two prepayments paid in July and November of the running tax year and based on the previous year’s income.

Because of the withholding tax system in Japan, employees may only need to file a tax return if only at least one of the 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

Income Tax Rates in Japan

The tax rates in Japan (as at 2009) for an individual is between 5% – 40%, and there are reduced rates of tax for certain income earners. Whereas the corporate tax in 2009 is currently fixed at 30% and there are also reduced rates depending on cases. For a full tax rate in Japan (in table summary form), you can visit this Japanese tax system website.

Types of Income tax in Japan

There are several types of income taxes in Japan though by far, the most significant is the National income tax. There are also enterprise tax (company tax), property tax, consumption tax, Vehicle related taxes, liquor, tobacco and gasoline tax

Current issue of Japanese Income Tax

The truth has it that the Japanese and the nation itself is facing a serious financial problem and has been in the worst recession since World War II. For the few years, Japan has been predicting a downward graph of their tax revenue income. The year 2009 has seen a 15 percent fall of tax revenue income from 53.6 trillion yen to 44.3 trillion yen, which probably be the biggest decline ever. The drop of about 9 trillion yen has led to the government decision to further increase the likelihood of issuing more government bonds after the fell short of target in tax revenue receipts.

More information on Japan’s Taxation System




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