Japan

Individual - Taxes on Personal Income

In Japan, permanent resident taxpayers are taxed on their worldwide income. Non-resident taxpayers are taxed only on their Japan-sourced income. Non-permanent resident taxpayers are taxed on their Japan-sourced income plus potentially part of their non-Japan-sourced income that is paid in or remitted to Japan.

 

Personal income tax rates

The current national income tax rates are:

 

Taxable income (JPY)

Over (column 1)                Not over                              Tax on Column 1 (JPY)   Tax on excess (%)

0                                           1,950,000                                                                           5

1,950,000                             3,300,000                            97,500                                   10

3,300,000                             6,950,000                            232,500                                 20

6,950,000                             9,000,000                            962,500                                 23

9,000,000                             18,000,000                          1,434,000                              33

18,000,000                           40,000,000                          4,404,000                              40

40,000,000                                                                      13,204,000                            45

 

The tax liability is determined by multiplying the excess taxable income for each bracket by the percentage above and adding the cumulative tax figure (see the Sample personal income tax calculation section for more information).

 

Surtaxes

A surtax took effect 1 January 2013. The surtax is comprised of a 2.1% tax that is assessed on an individual’s national income tax.

 

Local income taxes

Generally, in Japan, the local inhabitant’s tax is imposed at a flat rate of 10%. Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income. This applies where the taxpayer is a resident of Japan as of January 1 of the current year. For local inhabitant’s tax purposes, an equalisation per capita tax is also assessed. The standard annual amount is JPY 5,000, while this may vary based on the prefecture/municipality in which the taxpayer resides. Local inhabitant’s tax is not deductible.

 

Non-residents

A non-resident taxpayer’s Japan-source compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available. This rate includes 2.1% of the surtax described above (20% x 102.1% = 20.42%).

 

Anon.  2017. Japan individual - taxes on personal income http://taxsummaries.pwc.com/ID/Japan-Individual-Taxes-on-personal-income Date of access 20 Oct 2017