Japan Payroll Compliance Map

Email: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

WWT – Japan Payroll Income Tax Deduction

WWT-JP-01 WWT Tax Entity

Question from client:
Is the Japan salary income tax levied in national or local? Or both national and local?
Are the national and local personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Workers in Japan are subject to national income taxes and local resident taxes.
The national government of Japan enacts laws relating to income tax.
Employers use tax tables to calculate employee taxes.
The year-end adjustment requires employers to determine the total amount of tax each employee owes for the year, adjust the final salary payment for over-or under-payment of taxes.

https://www.nta.go.jp/publication/pamph/gensen/zeigakuhyo2019/data/01-07.pdf

WWT-JP-02 Registration

Question from client:
The Japan salary income tax collection is under the jurisdiction of which government unit?
The registration of the Japan salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate?
What is the advance certificate number of the number? Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
Salary income tax in Japan is administered by National Tax Agency (NTA).
Employers are requiring submitting a “Notification on the Establishment of a Salary-paying Office” within one month of the date of occurrence of either:

• The establishment of a new office that handles salary payments,
• The commencement of salary payment handling activities by any branch, business office or similar establishment.

WWT-JP-03 WWT Order (OD)

Question from client:
What is the order of Japan salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms.

WWT-JP-04 Mechanism of Filing (MOF)

Question from client:
Japan salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
Withholding tax filing is due by the 10^th day of the following month.
Withholding tax can be submitted online via e-Tax website at www.e-tax.nta.go.jp
“Application for Approval Made in Relation to the Special Provision for Due Dates for Withholding Income Tax” are available for companies with salaries pay to less than 10 employees.
As such withholding tax payment can be made to the tax office twice a year.
Due date 10 July for withholding tax of January till June and 20 January of the following year for withholding tax of July till December.

WWT-JP-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the Japan salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Payment is due by the 10^th day of the following month.
Withholding tax can be paid via e-Tax at www.e-tax.nta.go.jp or at a local financial institution (bank or post office) or over the counter of tax office, together with the submission of “Statement (Tax Payment Slip) of Collected Income Tax”.
Upon payment, record in the tax payment slip the reference number designated by the tax office.
The link below is the withholding income tax payment procedures using e-Tax, in Japanese language.
https://www.nta.go.jp/publication/pamph/gensen/zeigakuhyo2019/data/29-30.pdf

BNF – Deduction of Employee Social Welfare

BNF-JP-01 BNF Entity

Question from client:
Japan’s social insurance, medical insurance, pensions, and other employee social welfare levy, is it national? Is it local? Or is there a national plus local?
 If there is a national and local, are they levied separately? or levied together?
 What is the withholding tax rate?

Answer from Evershine RD:
The Government Council on Social Security was established and in 1950 the council advised on the universal social security system.
Among social security systems, pension systems are mainly operated by the national government, health care systems by prefectural governments and welfare systems by municipal governments.
Private organizations play roles in medical and welfare services.
Health insurance rates vary among Japan’s 47 prefectures.

BNF-JP-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country? Paper certificate number application? Or online account application? Website? Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:

Employers must enroll in social insurance programs by submitting labor and social insurance notification forms to the relevant authorities.
In the first year after the business is registered, estimated labor insurance premium payments must be made for 4 months periods depending on when the business was registered.
For health insurance and pension contributions, employers are to submit an Application to Enroll in Employees’ Health Insurance/ Employees’ Pension Insurance for each employee to the office of the Japan Pension Service serving that worksite.

BNF-JP-03 BNF Order (OD)

Question from client:
What is the order of the withholding declaration of social welfare for Japanese employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pay?
At the same time as the declaration and payment?

Answer from Evershine RD:
Same Period: Report and pay at the same time.

BNF-JP-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for Japanese employees (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? Every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Web site URL?

Answer from Evershine RD:
Returns need to file electronically, except for newly registered business filing their initial return.

Pension and Health Insurance contributions

From 1 July to 10 July each year, employers must report to the Japan Pension service on the number of employees as at 1 July and the amount of remuneration paid to each employee during the three-month period from April to June of the current year.
The report can be filed by CD or DVD, by mail or in person at the office, electronically using e-Government Japan portal.
The service will base on the Monthly Standard Remuneration (MSR) table for each employee.

Labour Insurance Contributions

From 1 June to 10 July each year, employers must file a return estimating the total wages to be paid and total labour insurance premiums owed for the labour insurance year.
These are assessed on actual remuneration paid instead of monthly standard remuneration.
Premium is assessed for the previous labour insurance year and makes the estimated payments of the premiums assessed for the current labour insurance year to the Ministry of Health, Labour and Welfare.

BNF-JP-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for Japan employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:

Pension and Health Insurance contributions

Contributions administered by the Japan Pension Service must be paid by the last day of the month following the month for which they were assessed.

Labour Insurance Contributions

If the estimated Labour Insurance payment is at least JPY 400,000, 3 installments due is 10 July, 31 October and 31 January following year.
However, the general contribution may not be included in installment payments.
Payment can arrange by way of e-transfer which is due on 6 September, 14 November, and 14 February instead.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Tokyo Evershine BPO Service Limited Corp.
E-mail: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

or
For exchanging data files between your Finance Accounting System and Evershine Cloud Accounting  Information System, please send an email to HQ4tyo@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Email address:dalechen@evershinecpa.com
Linkedin address:Dale Chen

Additional Information

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(version: 2024/07)

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