Taxation

Individuals living in Japan for one year or longer are required to pay national, prefectural, and municipal taxes.

Income Tax / Residence Tax

Income Tax

This tax is collected by the state. The sum payable is based on the income received from work performed from January 1 to December 31. In addition to this, residents must also pay residence tax and other taxes as prefectural and municipal taxes.

Income Tax Return / Withholding Tax

Individuals doing business are required to calculate their income and expenses and then file their income tax return with the tax office themselves. This procedure is known as Kakutei Shinkoku or preparation and filing of income tax return. Company employees have income tax deducted from their wages every month by their company. This is known as gensen choshuor withholding tax.

Year-End Tax Adjustment

It is common for the income tax paid from wages over the course of one year to not match up with the amount of withheld tax. The company calculates the difference in tax paid when paying the final wages of the year, a procedure known as Nenmatsu Chosei or year-end tax adjustment.

Medical Expense Tax Deductions / Tax Deductions for Dependents

A portion of the income tax filed may be returned to individuals who paid a huge amount for medical fees and those who experienced an increase in family members due to the birth of a child.

Automobile Tax / Light Vehicle Tax

Individuals who own automobiles, light vehicles, and other motor vehicles as of April 1 are required to pay these taxes. Once the notification for tax payment has been received from the prefecture or municipality, the tax must be paid into a bank, convenience store, or a similar facility before the deadline.

Vehicle Inspection

The Motor Vehicle Inspection and Registration System carries out vehicle inspections at predetermined periods to ensure that motor vehicles conform to the standards stipulated by law, and certifies/registers automobile owners. Vehicle owners who fail to receive the automobile inspections will be severely punished. Vehicle maintenance companies and similar businesses are commissioned to conduct the inspections.

Transfer of Ownership / Disposal of Vehicles

Automobile tax and light vehicle tax are taxes that must be paid by vehicle owners. It is therefore necessary to carry out the prescribed procedures at the Hyogo Land Transport Bureau when ownership has been transferred to another person or when a vehicle has been disposed of. Former owners who fail to carry out the procedures will still be required to pay said taxes.