Tax Rates in Japan
Information about the rate of tax paid by residents in Japan, how it is calculated and when to file a tax return...
The rate of income tax paid in Japan depends on the amount of taxable income earned. Taxable income is calculated based on total earnings minus some basic exemptions and tax relief. Exemptions and relief are granted for dependents, insurance premiums, medical expenses and business expenses for self-employed people.
Japan's tax rate is progressive with low income individuals paying tax at five percent and high income individuals paying tax at 40 percent. There are six different rates of income tax, which are calculated based on the net income of an individual.
In addition, the prefectural tax rate is four percent of taxable income and the municipal tax rate is six percent of taxable income.
- For a comprehensive guide to tax in Japan including deductions: Click here (PDF)
How to Pay Income Tax
Income tax is calculated based on either a self-assessment system where individuals complete a tax return, or a withholding tax system where an employer deducts tax from an employee's pay. This is the case for most people and it is only necessary to file a tax return in the following circumstances:
- When leaving Japan before the end of the tax year
- When a person is self-employed
- When an individual is employed by more than one employer
- On receiving any other kind of income
- If an individual has an income exceeding 20,000,000 yen
Municipal and prefectural taxes are collected by municipalities and should be paid directly to the relevant body upon notification that tax is payable. These are usually paid in quarterly instalments the following year.
The Japanese tax year runs from 1 January to 31 December. A tax return should be filed between 16 February and 15 Marchfor the preceding year.
All taxes are due between 15 March and mid-April of the following tax year, depending on the payment method. Prepayments are due in July and November of the current tax year and are based on the previous year's income. There are penalties for people who fail to meet the deadlines for paying tax. Those required to submit a self-assessment tax return should do so at their local tax office.
Further information on taxation in Japan is available from national and local tax offices.
- For contact details for regional and national tax offices: Click here
Any statements concerning taxation are based upon our understanding of current taxation laws and practices in Japan which are subject to change. While every effort has been made to offer information that is current, correct and clearly expressed the publisher is not responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. Readers are encouraged to seek professional advice concerning specific matters before making any decision.