Japan - Tax Guide for Freelance Contractors

In Japan, taxpayers can be permanent residents, non-permanent residents or non-residents.

Permanent tax residents in Japan:           are taxed on their worldwide income,
Non-permanent tax residents in Japan:  are taxed on their Japanese-source income and on income from other sources remitted to Japan,
Non residents for tax in Japan:                  are taxed on their Japanese-source income.

Foreign citizens can be considered to be non-residents for tax purposes:

•  if they stay less than 1 year in Japan

Foreign citizens are considered to be non-permanent residents:

•  if they stay over a year in Japan, but less than five years

Foreign citizens are considered to be permanent residents in Japan:

•  if they have had their residence in Japan for more than 5 years in total in the last 10 years

Japanese citizens are considered to be permanent residents from:

•  the day of their arrival in Japan

Married persons are taxed separately

Certain deductions are permissible for permanent and non-permanent residents including:

• social security contributions,
• insruance permiums,
• charitable contributions,
• personal deductions for the individual, a dependent spouse and children under the age of 23.  The amount of the deduction depends on the individual's personal circumstances. 

National income tax rates for 2011:

•  20.00% withholding tax for non-residents (no deductions applicable),
•    5.00% to 40% for permanent and non-permanent residents.

In addition, residents have to pay an inhabitant tax of 10% (composed by prefectural and municipal of a per capita levy and an income levy) on their taxable income. This local tax can be waived in certain circumstances.

Filing date:

Income tax declarations must be submitted before 15 March every year.