Japan - Other taxes and levies

Japan - Other taxes and levies

Taxation of international executives

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Social security tax

Are there social security/social insurance taxes in Japan? If so, what are the rates for employers and employees?

Employer (as of 1 April 2016)

Type of insurance Basis Contribution (%) Maximum premium (JPY)
Health insurance: Monthly   Monthly maximum
On salaries:   4.980 69,222
If 40 years old or older   5.770 80,203
On bonuses:   4.980 285,354*
If 40 years old or older   5.770 330,621*
Welfare pension insurance: Monthly    
On salaries   8.914 55,266
On bonuses   8.914 133,710
Employment insurance: Total payroll 0.700 No limit
Workmen's accident compensation insurance: Total payroll    
Manufacturing   0.250-2.600 No limit
Other business   0.250-10.800 No limit

 

* Maximum per year.

Employee (as of 1 April 2016)

Type of premium Basis Contribution (%) Maximum premium (JPY)
Health insurance: Monthly   Monthly maximum
On salaries:   4.980 69,222
If 40 years old or older   5.770 80,203
On bonuses:   4.980 285,354*
If 40 years old or older   5.770 330,621*
Welfare pension insurance: Monthly    
On salaries   8.914 55,266
On bonuses   8.914 133,710
Employment insurance: Total payroll 0.400 No limit
Workmen's accident compensation insurance: Total payroll    
Manufacturing   None N/A
Other business   None N/A

 

* Maximum per year.

Social insurance

The social insurance program in Japan consists of health insurance, nursing care insurance, pension insurance, employment insurance and workmen’s accident compensation insurance.

Health insurance is a system of paying medical care benefits and allowances to employees and their families.

The Employees’ Pension Insurance System aims to guarantee a stable life to the employees and their families by paying them benefits when the employees retire are disabled due to illness or injury, or in the event of their death.

Every individual who meets the prescribed conditions is expected to participate in these systems as an insured person, regardless of nationality. Individuals who are paid from outside of Japan are generally not required to participate in these systems.

Non-Japanese employees that leave Japan can claim a refund of employee national pension contributions. The employee must have paid contributions for at least six months to be eligible for the refund. Refunds will be given for up to three years of contributions. The amount of the refund depends on how long the employee made contributions and the average standard monthly remuneration.

The maximum standard remuneration for purposes of calculating the refund is JPY620,000.

Japanese governmental health, nursing, welfare pension, and employment insurance premiums are deductible in calculating taxable income. Generally, it should be noted that foreign social insurance premiums are not deductible.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Japan?

The gift tax is imposed on taxable properties acquired by gift in a calendar year less an annual exemption of JPY1.1 million. A donee domiciled in Japan is taxed on all gifts of property regardless of their location. A donee that does not have a domicile in Japan is basically taxable only on gifts of property located in Japan at the time of the gift. (If the donee is a Japanese national, an exceptional rule can be applied.)

Gift tax for (1) general gift and (2) special gift are calculated separately.

(1) General gift: Gift other than special gift.

(2) Special gift: Gift from the lineal ascendant (usually the parent or the grandparent by blood) to the donee at age 20 or over as of January 1 of the year the gift was made.

Aggregated net taxable value after

JPY 1.1 million deduction

For (1) General gift tax
Over Up to Multiplication amount Subtraction amount
0 2,000,000 10%  
2,000,000 3,000,000 15% 100,000
3,000,000 4,000,000 20% 250,000
4,000,000 6,000,000 30% 650,000
6,000,000 10,000,000 40% 1,250,000
10,000,000 15,000,000 45% 1,750,000
15,000,000 30,000,000 50% 2,500,000
30,000,000 No limit 55% 4,000,000

Aggregated net taxable value after

JPY 1.1 million deduction

For (1) General gift tax
Over Up to Multiplication amount Subtraction amount
0 2,000,000 10%  
2,000,000 4,000,000 15% 100,000
4,000,000 6,000,000 20% 300,000
6,000,000 10,000,000 30% 900,000
10,000,000 15,000,000 40% 1,900,000
15,000,000 30,000,000 45% 2,650,000
30,000,000 45,000,000 50% 4,150,000
45,000,000 No limit 55% 6,400,000

Land value tax is paid on leasehold and freehold land owned by individuals or corporations as of January of each year. However, this tax is frozen at present.

An individual who acquires property by inheritance or bequest and who is domiciled in Japan at the time of acquisition of such property is referred to as an unlimited taxpayer. The entire property acquired by an unlimited taxpayer by inheritance or bequest is subject to inheritance tax.

An individual who acquires any property located in Japan by inheritance or bequest and who has no domicile in Japan at the time of acquisition of such property is referred to as a limited taxpayer. A limited taxpayer is basically liable for inheritance tax on the inherited property located in Japan only, regardless of inherited property located outside Japan.

However, if the decendent had a domicile in Japan, the individual will be classified as an unlimited taxpayer taxed on worldwide assets. Therefore, for non-Japanese individuals, the domicile of the decedent will come into play when determining the scope of taxability.

Individuals who are Japanese nationals may be considered unlimited taxpayers even if residing outside Japan if they or the decedent had a domicile in Japan within 5 years of the inheritance or gift.

Certain exemptions and allowances are permitted in the computation of taxable property.

Inheritance tax rates range from 10 percent to 55 percent, with a 20 percent surtax on transfers to non-family heirs, as follows:

Over Up to Multiplication amount Subtraction amount
0 10,000,000 10%  
10,000,000 30,000,000 15% 500,000
30,000,000 50,000,000 20% 2,000,000
50,000,000 100,000,000 30% 7,000,000
100,000,000 200,000,000 40% 17,000,000
200,000,000 300,000,000 45% 27,000,000
300,000,000 600,000,000 50% 42,000,000
600,000,000 No limit 55% 72,000,000

Real estate tax

Are there real estate taxes in Japan?

The sale or other transfer of real estate is subject to real estate registration tax. The owners of property (including land, building and depreciable tangible assets) as of 1 January of each year are subject to a fixed property tax.

Sales/VAT tax

Are there sales and/or value-added taxes in Japan?

Consumption tax is imposed on goods and services at all levels. The tax rate is 5 percent (including 1.7 percent for local consumption tax).

Unemployment tax

Are there unemployment taxes in Japan?

Please see Social Security Tax Section.

Other taxes

Are there additional taxes in Japan that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Local taxes

Resident individuals who are self-employed are subject to a local enterprise tax on income from businesses or professions within Japan at rates ranging from 3 percent to 5 percent, depending on the type of business.

© 2016 KPMG Tax Corporation, a tax corporation incorporated under the Japanese CPTA Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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