AKJ Partners can provide bilingual (English and Japanese) payroll services such as:
- Payroll calculation if a corporation adopts “stock option plan” which is popular as a way to reward employees.
- Complex payroll calculation that requires gross-up calculation, etc.
- Year-end adjustment for foreign residents with dependents in their countries.
Furthermore, in the event that an employee needs to file a tax return after returning to his/her country,AKJ Partners will perform as a tax agent according to your needs.
Taxes levied on emoloyment income
National and local taxes are leived on employment income, such as income tax paid to the government and inhabitants tax paid to prefectures and municipalities.
In addition, insurance premiums including health insurance, employees’ pension insurance, long-term care insurance as well as employment insurance paid under the labor and social insurance systems are all withheld at certain premium rates from monthly salary or bonus.
Accident insurance premiums are paid only by the employer.
Withholding tax system
A corporation that pays monthly salary or bonus is required to withhold income tax, etc. from the amount of salary or bonus at the time of payment, and income tax collected under the withholding tax system must be paid by the due date.
The amount of income tax withheld under the withholding tax system differs depending on whether the employee is resident or non-resident in Japan.
In addition, the amount of withholding tax must be calculated based on the number of dependents, other requirements etc.
Inhabitants tax paid to municipalities, in principle, is also withheld from the amount of salary or bonus at the time of payment.
Year-end adjustment (Nenmatsu-chosei)
Income tax on the annual salary is recalculated and necessary income tax adjustment for each employee is performed by a salary payer in December every year.
In a case where there is a difference between such recalculated amount and the total amount of income tax withheld from the monthly salary, the difference will be settled from the salary paid in December.
This procedure is called “year-end adjustment”, which a salary payer must perform to all salary payees (i.e., all employees and directors) who are enrolled at the end of December each year, and issue a certificate of income and withholding tax to each payee.
Submission of “Report of Payment” and “Salary Payment Report”
A salary payer must submit a record on the salary amount paid to its employees and directors in a year to the relevant tax office and municipalities that have jurisdiction over the address of these employees and directors by January 31,the following year.
In a case where an expatriate who will no longer have an address in Japan due to complete return to his/her home country, etc.,needs to process tax related matters such as filing a tax return in Japan, a tax payment administrator, i.e., “tax agent” must be appointed so as to prepare a tax return or deal with the relevant tax office on his/her behalf (“Notification of Tax Agent for income tax”).