Tax：Income Tax / Inhabitant Tax

Tax

There are several types of tax in Japan, such as Income Tax/Inhabitant Tax (these taxes are deducted from salary) or Consumption Tax and Excise Tax on shopping etc. These taxes are used for public services (e.g. environment for transportation, security, education or social welfare etc.) which are provided by government or local authorities.

National Tax and Council (Local) Tax

In Japan, we have 2 categories of tax; National Tax and Council (Local) Tax.
Examples:
National Tax: Income Tax, Business Tax
Council (Local) Tax: Metropolitan Inhabitant Tax, Municipal Inhabitant Tax

This section describes income tax and inhabitant taxes on individuals in which are related to salary and accommodation (living) expenses.

I. Income Tax

Income Tax is imposed with respect to all income earned from January 1 through December 31 of the year. If you are an employee, your employer withholds the income tax from your salary (Tax Withholding*1), and then does Year-end Tax adjustment at year-end for you.
Even though you are non-Japanese citizen, you need to pay the income tax if you receive salary in Japan.

Note: Every UEC employee has to submit the “Declaration of Dependents' Exemption for Salary Earners（給与所得者の扶養控除等（異動）申告書）" to the Personnel and Labor Affairs Office when he/she takes a position at UEC.

How to fill in the "Declaration of Dependent Exemption on Income Tax ": Please refer to "Procedure Related to Income Tax and Inhabitant Tax" (internal access only) in CIPE webpage "Guide for Researcher".

*1 Tax Withholding

Tax Withholding is a system that withholds a certain amount of income tax from the payers' salaries after a social insurance etc. is deducted from monthly salary. However, the amount of income tax does not match the deduction of each month because of the following elements:

1) Changing the number of dependents for tax exemption in the middle of a fiscal year

2) Life insurance deduction and special deduction for dependents are made at year-end of each year

When you receive your final payment of the year, you also receive a special adjustment at year-end to pay or refund the tax balance due to the above reasons. It is so-called "Year-end Tax Adjustment (Nenmatsu Chosei *2)".

*2 Year-end tax adjustments

Year-end tax adjustment (Nenmatsu Chosei) is a system that an employer calculates income tax based on annual income of employee, and then the income tax withheld automatically each paycheck. However, there are the cases that the employer cannot do Year-end tax adjustment (Nenmatsu Chosei) for the employee. In that case, you need to file tax return, which is called Final Income Tax Return (Kakutei Shinkoku*3), by yourself.

※UEC distributes a document to every employee for Year-end tax adjustment at the end of each year. Once you have received the document, please make sure to fill in and submit it to the Personnel and Labor Affairs Office.

Important:

Income Tax Withholding Slip：(Please see an example of Income Tax Withholding Slip.)
Income Tax withholding Slip is sent to you from your employer after Year-end tax adjustment (usually it should be in the middle of January of each year.). The slip shows how much you earned for 1 year and how much you paid as your income tax in previous year. Income Tax withholding Slip is a very important document because it is one of required document for "Final Tax Return" *3. Please make sure to keep it safe.

*3 Final Income Tax Return

Final Income Tax Return is based on the self-assessment system which a taxpayer calculate the amount of income, expenses and taxable income, and file tax return by themselves, including fill in the prescribed form. You need to submit the application form and supporting documents to the Tax Office (National Tax Agency) where you reside.
(Sample for the application form)
https://www.nta.go.jp/tetsuzuki/shinkoku/shotoku/yoshiki01/shinkokusho/pdf/h27/01.pdf

Important:  There are some cases that international researchers who are enrolling in UEC are required to do "Final Tax Return". Please see "Procedure Related to Income Tax and Inhabitant Tax" (internal access only) in CIPE webpage "Guide for Researchers" for further details .

II. Inhabitant Tax on Individuals

Inhabitant Tax is imposed on individuals, including non-Japanese citizen, by local authorities (Prefecture and Municipal) and with respect to all income earned from January 1 through December 31 of the year. "Individual inhabitant taxes" is the collective term for prefectural tax and municipal tax on individual income, and persons having a domicile etc. in Japan as of January 1 each year are subject to these taxes. Thus, if you move to another city after January 2, you have to pay the inhabitant tax to the municipal office where you reside on January 1.

Important: There are some cases that international researchers who are enrolling in UEC are required to submit the “Declaration of Municipal Inhabitant Tax and Metropolitan Inhabitant Tax on Individuals” to the Tax Office. Please see “Procedure Related to Income Tax and Inhabitant Tax” (internal access only) in CIPE webpage “Guide for Researchers” for further details.

Created: December 13, 2017 / Last modified:December 13, 2017