Japan Individual Tax Services

Business Set-Up & Support

Japan individual tax matters must be planned in advance and all compliance must be done in a timely manner. As a member of the Accounting Asia Group, our qualified Japanese professionals can handle all aspects of Japanese individual tax.

Key Features of our Japan Individual Tax Services

The following are some key features of our Japan Individual Tax Service.

1. Pre-Assignment Planning

It is important that Japan tax planning for international assignees be done prior to or (at latest) concurrent with the Japan work visa application.

Particularly important aspects of Japanese individual tax include:

  1. Scope of Taxable Income

    Foreigners in Japan will be classified as non-resident, non-permanent resident, or permanent resident. Each classification has different implications with respect to the scope of income that will be subject to Japanese individual tax.

  2. Applicability of Double Tax Agreements (“DTA”)

    Japan has DTAs in place with more than 60 countries. In cases where an assignee is considered a non-resident, planning opportunities afforded by the applicable DTA need to be considered.

  3. Location of Japan Payroll

    Many international assignees will require both an onshore payroll (for the purpose of paying withholding tax on taxable benefits received in Japan) as well as an off-shore payroll.

  4. Tax Efficient Structuring of Specific Benefits

    Total compensation should be structured in a method that takes into account tax efficient benefits such as company provided housing.

  5. Director Issues

    Planning may be required to manage the adverse individual and corporate tax consequences associated with director status in a Japanese company.

2. Annual Japan Individual Tax Compliance

Japanese individual tax compliance obligations vary depending on an assignee’s circumstances.

  1. Onshore Payroll

    A Japanese individual tax return may not be required where payroll is completed entirely within Japan. In such cases, a “year-end adjustment” is carried out via the Japan payroll in December each year.

  2. Offshore Payroll

    A Japan tax return must be filed where an assignee’s payroll is completed off-shore. This involves a final return submitted by 15 March each year and up to six interim / provisional tax payments throughout the year.

3. Post Assignment Tax Issues

There are a number of critical tax issues relevant to the end of an assignment in Japan. These include:

  1. Post Assignment Finalization of Japan Individual Tax

    Before departing Japan, foreigners must either lodge a Japan tax return and fully settle their tax liability or appoint a Japan tax agent. Appointment of a tax agent is often preferred since it allows the tax return to be submitted and tax paid by 15 March of the following year.

  2. Timing of Departure

    Timing of departure can be a critical issue. Japan's system of local tax is based upon where an individual is resident on 1 January. Where flexibility regarding an assignment end-date exists, there may be substantial tax savings associated with ending an assignment prior to 1 January.

The above is provided for general information purposes only and does not constitute advice to undertake or refrain from undertaking any action. Only qualified Japanese professionals are able to advise on Japan immigration, legal, and tax matters.