What is Residence tax? Are foreign nationals required to pay?
Foreign residents in Japan are required to pay tax to the municipality in which they reside as of January 1st. Residence Tax or Juminzei (住民税), is a local tax levied separately from national income tax. It is divided into municipal residence tax and prefectural residence tax.
RESIDENCE TAX COMPUTATION
The amount of residence tax is determined by your previous year’s income and the number of dependents. Please pay your outstanding tax by the indicated deadline. If you do not pay, your salary bank deposit, or other assets may be seized by the government.
An individual is required to pay his/her Residence Tax from the municipal in which they reside as of January 1st. Even if the individual changes address or move to a different place, he/she still needs to pay the amount of the computed residence tax from the place he/she lived on January 1st. Also, it is based on the city where the individual resides, not where he/she works.
The Residence Tax 6% of your annual income, which is based on the previous year.
WAYS TO PAY YOUR RESIDENCE TAX
1.Futsu Choshu (普通徴収)
This is a method in which the person pays directly at a financial institution. And also referred to or applicable to those who are not subject to a special collection, such as self-employed persons and freelancers.
Please pay your tax using the payment slip sent to you by the local municipal.
sample image of a Futsu Choshu
It contains four payment slips that must be paid four (4) times. Phase 1(June), Phase 2(August), Phase 3(October), Phase 4(January). You also can pay at banks, post offices, and convenience stores.
A picture showing the quarterly payment of a Futsu Choshu (普通徴収)
2.Tokubetsu Choshu (特別徴収）
This is where you receive a resident tax statement from your employer. The total resident tax will be divided into 12 installments and withheld from your monthly salary automatically.
** Compared to Futsu Choshu in which the payment is only divided into 4 times, Tokubetsu Choshu payment is better because it will be split up to 12 times.
Remember, some companies provide Tokubetsu Choshu payments automatically so it is best to ask them or let them know that you want to pay by Tokubetsu Choshu method.
Just give them the 4 pieces of payment slips you received.
Picture showing the Tokubetsu Choshu（特別徴収）
DELINQUENCY CHARGE （延滞金）
A delinquency charge will be added to the tax by the due date or when the payment was paid late. The rate changes every year so it is advisable to settle the payments as early as possible to prevent delinquency charges.
WHAT IF YOU DON’T PAY YOUR RESIDENCE TAX
Residence Tax is a city tax that is paid to your local municipal government. Remember to settle paying it to prevent delinquency charges. Failing to pay on time for a long time might result in the government seizing your personal assets. A warning will be issued until the government seizes your assets so it is suggested to pay on time.
1st Warning: Receiving a notice about the unsettled payment.
2nd Warning: Another notice about the unsettled payment.
3rd Warning: Will receive another notice plus a memo about the possibility of seizing personal assets for the unsettled payment.
4th Warning: The government will be doing some action to seize your personal assets to compensate for the unsettled tax payments. Personal assets cover your own bank account funds, jewelry, car, even your own home.
NOTE TO REMEMBER
If you’re having issues with your payments, you can always consult your local municipal and confirm whether you have unsettled payments. Paying your taxes on time has a connection with your visa renewal so it would be best to settle all pending payments.
Information site supporting foreigners living in Japan.