As a member of the Accounting Asia Group, Japan Visa can manage all aspects of a Japan payroll.
Key features of our Japan Payroll Service include:
- Initial consulting to ensure the Japan payroll is structured to meet each client’s needs.
- Monthly withholding of Japanese national tax and local tax.
- Deductions for Japanese statutory programs including Japanese social insurance and Japanese labor insurance.
- Payment of net salary to the employees’ bank accounts in Japan.
- Providing employees with a monthly pay-slip that confirms the calculation of net salary.
- Monthly transfer of amounts withheld to the relevant Japanese government authorities.
- Annual reporting to the Japanese authorities for Japanese social insurance, labor insurance, and withholding tax purposes.
Typical Flow of our Japan Payroll Service
The typical flow of our Japan Payroll Service is as follows:
1. Initial Consulting
Japan Visa can assist with the preliminary issues that need to be considered before a Japan payroll can be successfully implemented, including:
Ensuring that the payroll solution meets the needs of both locally hired staff and international assignees, since these two groups may have differing Japan payroll requirements.
A key component of this process is basic compensation planning. This article provides some additional information regarding Japan Taxes: Tax Planning for Foreigners Working in Japan.
- Guiding clients to make important initial payroll decisions including:
- Selecting an appropriate date for the payment of monthly salary.
- Deciding whether to divide annual compensation into twelve equal installment payments or implement a traditional Japanese bonus system.
- Confirming issues associated with payroll location. In the case of international assignees, it may be appropriate that some part of the Japan payroll be done offshore.
2. Initial Payroll Filings
Following the establishment of a Japan business entity, a number of payroll related filings with Japanese government authorities are required.
These filings include:
- Withholding tax registration with the Japanese national tax authorities.
- Withholding tax registration with the Japanese local tax authorities.
- Registration for Japanese social insurance.
- Registration for Japanese labor insurance.
3. On a Monthly Basis
The typical flow of our Japan Payroll Service on a monthly basis is as follows:
- Provide the client with a breakdown of that month’s payroll and request funds to cover:
- Employees’ salary payments.
- Income tax withholding.
- Social insurance contributions (both the employer and employee).
- Funds are remitted directly to each employee’s personal bank account. Pay-slips confirming the calculation of that month’s net payment are then provided to each employee.
4. Annual Reporting
On an annual basis, our Japan Payroll Service includes the following activities:
Annual withholding tax report
This report confirms the amounts withheld from employees’ salaries (for national tax and local tax) during the previous calendar year.
- Annual labor insurance report.
- Annual social insurance report.
- Year-end payroll adjustment.
For most Japanese employees, this payroll-based function replaces the need to submit an individual income tax return. National and local tax paid during the year is adjusted and the employee may receive either a refund or additional tax will be deducted.