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Japanese Income Tax Code
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With respect to Article XIII, paragraph 2 and Article XIV, paragraph 7,income payable in Japan as a result of service with or employment by theUnited States armed forces or by the organizations provided for in ArticleXV, or under contract made in the United States with the United States Government,shall not be treated or considered as income derived form Japanese sources.
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 yearif their employer does not withhold taxes (e.g. employer outside Japan)if they have more than one employerif their annual income is more than 20,000,000 yenif they have side income of more than 200,000 yen
Employees, who do not need to file a tax return, will have their income taxes withheld from their salaries by their employer, and an eventual adjustment is made with the year's final salary. People, who are required to file a tax return, such as self-employed persons, must do so at the local tax office (zeimusho), by mail or online (e-Tax) between February 16 and March 15 of the following year. The tax return for 2022 has to be filed between February 16 and March 15, 2023.
If not withheld by the employer, national income taxes are due in full by March 15 of the following year (mid April if you pay by automatic bank transfer), with two prepayments paid in July and November of the running tax year. Prepayments are calculated based on the previous year's income, i.e. you do not pay them during your first year in Japan.
If prefectural and municipal income taxes are not withheld by the employer, they are to be paid in quarterly installments during the following year. For example, the 2022 taxes are paid in four installments in June, August and October 2023 and January 2024.
The tax rate is determined based on the taxable income. Like in other countries, taxable income is the total earnings minus a basic exemption, exemptions for dependents and various types of deductions, such as deductions for insurance premiums, medical expenses and business expenses of the self-employed.
National Income Tax RatesTaxable IncomeTax Rateless than 1.95 million yen5% of taxable income1.95 to 3.3 million yen10% of taxable income minus 97,500 yen3.3 to 6.95 million yen20% of taxable income minus 427,500 yen6.95 to 9 million yen23% of taxable income minus 636,000 yen9 to 18 million yen33% of taxable income minus 1,536,000 yen18 to 40 million yen40% of taxable income minus 2,796,000 yenmore than 40 million yen45% of taxable income minus 4,796,000 yen
Certificates of coverage issued by Japan should be retained by the employer in the United States in case of an audit by the Internal Revenue Service (IRS). No copies should be sent to IRS unless specifically requested by IRS. However, a self-employed person must attach a photocopy of the certificate to his or her income tax return each year as proof of the U.S. exemption.
This website dedicated for European SMEs includes links to authorities on specific trade issues and a searchable database by customs tariff code to get market access information for the Japanese market.
The Government of Canada and the Government of Japan, desiring to conclude a new convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:
4. The provisions of paragraph 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
2. Notwithstanding the provisions of Article 2, provided that no political subdivision or local authority in Canada levies an income tax or a tax similar to the enterprise tax in Japan in respect of the operation of ships or aircraft in international traffic carried on by an enterprise of Japan, an enterprise of Canada shall be exempt from the local inhabitant taxes and the enterprise tax in Japan in respect of the operation of ships or aircraft in international traffic.
3. The term \"dividends\" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other Contracting State.
5. The term \"interest\" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the taxation laws of the Contracting State in which the income arises.
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in that other Contracting State but only so much of it as is attributable to that fixed base.
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State.
Such income shall, however, be exempt from tax in that other Contracting State if such activities are exercised by an individual, being a resident of the first-mentioned Contracting State, pursuant to a special programme for cultural exchange agreed upon between the Governments of the two Contracting States.
2. Where income in respect of personal activities exercised in a Contracting State by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person who is a resident of the other Contracting State, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the first-mentioned Contracting State.
Such income shall, however, be exempt from tax in the first-mentioned Contracting State if such activities are exercised pursuant to a special programme for cultural exchange agreed upon between the Governments of the two Contracting States.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may be taxed in that other Contracting State.
For the purposes of this paragraph, profits, income or gains of a resident of Canada which are taxed in Japan in accordance with the provisions of this Convention shall be deemed to arise from sources in Japan.
3. The Convention between Canada and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed at Tokyo on September 5, 1964, shall terminate and cease to have effect in respect of income to which this Convention applies under the provisions of paragraph 2.
4. The termination of the Convention between Canada and Japan for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income signed at Tokyo on September 5, 1964 as provided in paragraph 3 shall not revive the Agreement between the Government of Canada and the Government of Japan made by the Notes exchanged at Ottawa on September 21, 1929, concerning reciprocal exemption from income tax on profits accruing from the operation of ships. Upon the entry into force of this Convention that Agreement shall terminate.
3. With reference to Articles 6 and 13 of the Convention, in the case of Canada, income from the alienation of immovable property shall be subjected to taxation in accordance with the provisions of paragraph 1 of Article 6 of the Convent