Individual Income Tax

I. Kinds of taxes in Japan

	National Taxes	Local Taxes
Prefectural Taxes	Municipal Taxes
Taxes on income	Individual income tax and Corporation tax	Prefectural inhabitants’ tax and Enterprise tax	Municipal inhabitants’ tax
Taxes on gifts and inheritances	Gift tax and Inhertace tax	---	---
Taxes on properties	---	Automobile tax	Fixed asset tax, Special landholding tax, City planning tax, Light motor vehicle tax, Enterprise establishment tax
Taxes on consumption	Consumption tax	Golf course utilization tax	---
Taxes on transactions	Stamp tax, Registration and license tax	Real property acquisition tax and Automobile acquisition tax	---

Taxes on Income and Profit

The taxes that are levied on an individual’s income are income tax, inhabitant tax, and, to a certain degree, enterprise tax.

Individual Income Tax

Income refers to the total amount of earnings minus the necessary deductible expenses to get those earnings during a year. Income is categorized into 10 types: income from interest, income from dividends, income from real estate, business income, employment income, retirement income, income from forestry, capital gains, occasional income, and miscellaneous income. Under the self-assessment system, taxpayers who have taxable income must calculate the whole income earned for the year from January 1 to December 31 and their tax liability (amount), and pay the amount of tax that is due. However, salary earners are not required to file tax returns, because their employers withhold taxes from employee salaries and wages and then make year-end adjustments to the amounts paid. Those who must file final returns are:

- those whose annual income from one source exceeds ¥20 million,

- those whose income from sources other than salary and retirement income exceeds ¥200,000,

- those who earn salaries from two or more sources. The period for filing final returns for income earned during a year is from February 16 to March 15 of the following year.

Classifications of taxpayers. Taxes are levied on an individual in accordance with the residential status of the individual. Residential statuses are classified into the following categories.

Individuals:

1. Residents ( those who have a domicile in Japan and have resided continuously in Japan for one year or more )

1.1. Non-permanent residents ( non-Japanese nationals who have not had a domicile or residence in Japan continuously for more than five years in the past ten years )

1.2. Permanent residents ( all residents other than non-permanent residents )

2. Non-residents ( all individuals other than residents )

Scope of taxable income

Classification	Scope of Taxable Income
Income from Sources in Japan	Income from Sources Abroad
Paid in Japan	Paid Abroad	Paid in Japan	Paid Abroad
Resident	Non-permanent Resident	All income taxable	All income taxable	All income taxable	The part deemed to be remitted to Japan is taxable. (The part retained abroad is not taxable.)
Permanent resident	All income taxable	All income taxable	All income taxable	All income taxable
Non-resident	Income taxable in principle	Not taxable

Income tax rates

Brackets of taxable income (Unit: ¥1,000)	Tax rate (%)
Over	Not over
-	1,950
1,950	3,300
3,300	6,950
6,950	9,000
9,000	18,000
18,000

Inhabitants’ Tax Prefectural inhabitants’ tax and municipal inhabitants’ tax are generically called inhabitants’ tax. The inhabitants’ taxes are levied on a per-income base and a per-capita basis on those who have a domicile as of January 1. For those who have an office or a house, even if they do not live there, the inhabitants’ taxes are levied on a per-capita basis.

The amount of inhabitants’ tax is calculated on the basis of the income earned in the previous year. The tax rate is 10% of income, regardless of the amount of income. The standard amount of per capita tax levied in a year is ¥4,000, regardless of the amount of income. However, during the years from 2014 to 2023, ¥1,000 will be added to the standard amount of per capita tax as a Special Reconstruction Tax.

Date: 2015-12-11; view: 840

<== previous page	\|	next page ==>
An ad valorem tax / A unit of specific tax	\|	Taxes on Corporate Income

doclecture.net - lectures - 2014-2024 year. Copyright infringement or personal data (0.008 sec.)