Overview[]
- Income tax or 所得税 (しょとくぜい, shotokuzei) is levied via the withholding tax system. In other words, it is automatically withheld by your contracting organization and paid to the National Tax Agency of Japan. Your CO will calculate your taxes for you based on your income and relevant deductions. However, there have been instances where COs have taxed JETs incorrectly, so please consider using this information to double check your payment amount.
How to Pay[]
- Income tax in Japan is calculated and automatically withdrawn from your monthly paycheck by your Contracting Organization. Tax filing and refunds are also handled by the CO every year. In other words, it is not necessary for JETs to file taxes in Japan in March.
How to Calculate[]
- You can calculate an estimate based specifically on JET salaries using the following calculator. (Note: Google Docs may be blocked on public school laptops.)
- In general, you may expect to pay approximately the following amounts if you do not benefit from a Tax Exemption Treaty. (Note: These amounts are rounded.)
| Taxes Due | Total | Monthly |
|---|---|---|
| 1st Calendar Year (your arrival year) | ¥20,000 | ¥2,000 |
| 2nd Calendar Year | ¥69,000 | ¥6,000 |
| 3rd Calendar Year | ¥77,000 | ¥7,000 |
| 4th Calendar Year | ¥83,000 | ¥7,000 |
| 5th Calendar Year | ¥85,000 | ¥8,000 |
| 6th Calendar Year | ¥37,000 | ¥4,000 |
- Simply put, Income Tax = Taxable Income * Tax Rate (5%). However the Taxable Income is calculated differently than the Taxable Income for Residence Tax.
Click to enlarge
- Taxable Income = Employment Income - Total fixed-rate exemptions (i.e. Insurance Payments) - ¥380,000
- Employment Income = Annual Income (7 months of one JET salary plus 5 months of your JET salary after your yearly raise) input into the table below: (Your salary amount should fall within the highlighted section unless you qualify for Tax Exemptions.)
- Tax Exemptions = If you qualify for tax exemptions, subtract the tax exempt amount from your Annual Income before applying the math from the table. For example, a third year JET whose salary had been tax exempt until July should calculate: ¥3,725,000 (Jan-Dec salary) subtract ¥2,100,000 (Jan-July salary) = ¥1,625,000
Employment Income Calculation
- Total Fixed-Rate Exemptions = the total amount that was withdrawn from your paycheck monthly for Pension Insurance, Health Insurance, and Employment Insurance. This number can also be found on your "Income Tax Withholding Statement" which is given to you in January by your contracting organization. It can also be estimated by multiplying your Annual Income by 14% (9% for Pension Insurance, 5% for Health Insurance, .3% for Employment Insurance)
- Standard Deduction = A flat ¥380,000 deduction that all tax payers are entitled to.
- Tax Rate = The Tax Rate is determined by your Taxable Income number input into another table (similar to the calculation of Employment Income). JET salaries for all years and under all Tax Exemptions fall into the 5% tax bracket. For more specific information, see page 51 of the National Tax Agency's Guide (English)
Tax Exemptions[]
Tax Treaties[]
First and second year JETs from the following nationalities may be exempt from taxes due to a tax treaty their home country holds with Japan:
- China (up to three years)
- Ireland
- United States (NO MORE*)
- Korea
- Germany
- Philippines
- France
JETs from the UK, Australia, Canada, Jamaica, Singapore, Trinidad and Tobago, New Zealand, Barbados, and South Africa are not eligible for tax exemption. You can find more information about the tax situation in your home country on the Ishikawa JET Wiki.
In order to qualify for Tax Treaty Exemption, you will need to file the Income Tax Convention Form and proof of Tax Residency in your home country such as the IRS Form 6166 which American JETs were told to bring with them.
*However, due to revisions to the Japan-U.S. Tax Treaty, ALTs who entered Japan on and after 31 August 2019 will not be eligible for tax exemption starting in November 2019. This means, if you arrived Japan between 31 August and 31 October and you submit the tax exemption paperwork, you will only be exempt from taxes for the months of September and October. American ALTs who arrived by 30 August 2019 will be eligible for 2 years of tax exemption.
Other Exemptions[]
Beyond international treaties, there are further exemptions available for such things as high medical expenses and unemployed spouses/dependents. In order to apply these exemptions, you must file the necessary paperwork with your school's office. Please read more in the National Tax Agency's 2017 Income Tax and Special Income Tax for Reconstruction Guide for Aliens and discuss with your supervisor if you believe you are eligible for further exemptions.
Common Issues[]
- Employers in Japan are responsible for the vast majority of the tax calculation and filing for citizens. As such, it is not uncommon for there to be some mistakes. Some of the most common errors for Tokyo JETs are as follows.
| |
|---|---|
| What it looks like | You are paying Income Tax and Residence Tax although you have a 2-3 year exemption. |
| Cause | If you do not file the necessary paperwork for your tax treaty immediately upon arrival, you may find that you are taxed according to the standard rate. Private school JETs in particular seem to have this problem as schools often do not know to ask for your paperwork. |
| Solution | Contact your supervisor and office staff. JETs with this problem have been able to file their tax treaties late and be refunded the full amount paid. You will need to apply for the refund by filling out the application with your school, who will then file it for you. |
| |
| What it looks like | After your Tax Exemption expires, you are taxed more than the expected amount. (i.e. ¥7,700 rather than ¥660) |
| Cause | This income tax amount is calculated using your "Annual Income" rather than your "Annual Income minus Tax Exempt Amount (Jan-July salary)". |
| Solution | The overtaxed amount will almost certainly be automatically refunded to you at the end of the year as part of the "Year End Adjustment" during which companies reevaluate the calendar year's taxes and refund or withdraw as needed. It will be included in your paycheck and may take the form of a negative number in your "Income Tax" section of your December or January pay slip. If you are concerned that the amount was not refunded, contact your supervisor and school office. |
Useful Vocabulary[]
| English | Romaji | Kanji |
|---|---|---|
| Income Tax Withholding Statement | kyuyo-shotoku-gensen-choshu-hyo | 給与所得源泉徴収票 |
| Income Tax | shotoku-zei | 所得税 |
| Total Annual Income | kyuyo-shunyu | 給与収入 |
| Total fixed-rate exemptions | shotoku-kojo | 所得控除 |
| Income after employment income deduction | kyuyo shotoku | 給与所得 |
| Total Taxable income | kazei-shotoku | 課税所得 |
See Also[]
- Taxes Category
- Income Tax
- Residence Tax
- Spring Tax Deduction
- Pension Refund (Public)
- Pension Refund (Private)