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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 2019)

Type of insurance Basis Contribution (%) Maximum premium (JPY)
Health insurance: Monthly   Monthly maximum
On salaries:   4.95 68,805
If 40 years old or older   5.815 80,829
On bonuses:   4.95 283,635*
If 40 years old or older   5.815 333,200*
Welfare pension insurance: Monthly    
On salaries   9.15 56,730
On bonuses   9.15 137,250
Employment insurance: Total payroll 0.600 No limit
Workmen's accident compensation insurance: Total payroll    
Manufacturing   0.250-2.600 No limit
Other business   0.25-8.8 No limit

 

* Maximum per year.

Employee (as of 1 April 2019)

Type of premium Basis Contribution (%) Maximum premium (JPY)
Health insurance: Monthly   Monthly maximum
On salaries:   4.95 68,805
If 40 years old or older   5.815 80,828
On bonuses:   4.95 283,635*
If 40 years old or older   5.815 333,199*
Welfare pension insurance: Monthly    
On salaries   9.15 56,730
On bonuses   9.15 137,250
Employment insurance: Total payroll 0.300 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 6 months to be eligible for the refund. Refunds will be given for up to 3 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% 0
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

JPY1.1 million deduction

For (2) Special gift tax
Over Up to Multiplication amount Subtraction amount
0 2,000,000 10% 0
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.

Inheritance tax and gift tax are levied on an heir who acquired properties by inheritance and an individual (a donee) who acquired properties from another individual (a donor) as a gift, respectively. The scope of taxable properties depends on whether the individuals have or had domicile in Japan and whether they hold Japanese nationality.

Under the 2017 tax reform, the scope of the tax payment obligations of inheritance tax/gift tax was amended in that inheritance tax/gift tax will not be imposed on properties located outside Japan with respect to inheritance/gifts involving foreign nationals living or having lived temporarily in Japan under certain conditions.

However, the 2017 tax reform also included amendments to expand the scope of taxable properties for cases where a foreign national living outside Japan (an heir/donee) obtains properties from a foreign national who had lived in Japan for more than 10 years (a decedent/donor) within 5 years after the decedent/donor left Japan. 

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% 0
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) and it will generally increase to 10 percent (including 2.2 percent for local consumption tax) on 1 October 2019.

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 to 5 percent, depending on the type of business.

© 2019 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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