日本で確定申告書の提出が必要な方への税務サービスです。
日本への投資の際の税務相談、確定申告書の作成、提出、税務調査対応、日本所在の資産の売却に係る税務相談等、税務に関するサービスを幅広く展開しています。
Overview of Individual Income Tax Return
AKJ Partners provides individual income tax related services including tax filing for individuals.
We provide a wide range of tax related services for individuals such as;
- Tax consultation regarding investment in Japan
- Preparation and submission of an individual income tax return
- Tax audit support
- Tax consultation on the sale of assets located in Japan
Taxes Imposed on Individuals
Taxes imposed on individuals differ depending on the residence status.
Major taxes levied on residents are income tax and inhabitants tax.
In a case where an individual is a business owner, he/she will be subject to business tax, consumption tax,and property tax if he/she owns real estate in Japan.
Income tax
Residence status and taxable income
The scope of taxable income varies depending on the status of residence.
Foreigners who do not have Japanese nationality and do not live in Japan are classified into following categories depending on the period of stay in Japan.
The following table shows the status of residence and taxable income for foreigners.
| Residence status | Period of stay | Aggregate period of stay in Japan within the last 10 years | Residence status |
|---|---|---|---|
| Non-Resident | Less than one year | ー | Domestic sourced income |
| Non-Permanent Resident | 1 year or more | 5 years or less | Domestic sourced income Foreign sourced income paid in Japan Foreign sourced income paid in abroad and remitted to Japan |
| Permanent Resident | 1 year or more | More than 5 years | All income including foreign sourced income which is not remitted to Japan. |
Types of income and taxation method
Taxation method varies depending on the type of residence and income earned.
- Income which is not required to file a final income tax return, as its payer withholds taxes from the amount of income.
- Income which is required to file a final income tax return after its payer withholds taxes from the amount of income.
- Income which is required to file a final income tax return as its payer does not withhold taxes from the amount of income.
[Example]
If a non-resident owns real estate in Japan and earns rent income from such real estate, income taxes are collected by the withholding tax system at the time of rent payment (with exceptions), and a final income tax return must be submitted for these rent income on an annual basis.
Rate
Japan’s income tax rate is progressive with low income individuals paying tax at five percent and high income individuals paying tax at 45 percent.
Note that, the surtax is comprised of a 2.1% tax, will be assessed on an individual’s national income tax.
Income tax leveied on income from ordianry business activity, and income from rent Major types of income
- Income subject to the comprehensive income taxation which allows “Profit/Loss Offset” (i.e., business income, income from real estate)
- Income subject to “Profit/Loss Offset” but is applicable to different tax rates (i.e., retirement income)
- Other types of income such as capital gains with certain restrictions on “Profit/Loss Offset”
Business income and rental income from leasing real estate are subject to the comprehensive income taxation and profit and loss earned from these income are offset against other income subject to “Profit/Loss Offset”.
(Rental income from leasing real estate is treated as miscellaneous income if the scale of business is considered small.
In the event that miscellaneous income results in a loss, such loss cannot be carried over.)
Note that, taxpayers filing blue returns are allowed to receive certain preferential tax treatment.
Captial Gs (separate filing)ain/Los
Under the current system, there is limited scope for offsetting profit and loss for income earned from selling assets such as land, buildings, etc.,or income earned from selling securities, etc.
For example, capital losses on shares cannot be offset against interest income on deposits and bonds.
In addition, losses arising from these transactions have similar restrictions.
Certain income earned from transfer of land, buildings and securities is not subject to aggregate taxation, and the tax amount is calculated separately at a tax rate provided below:
| Classification | Tax rate (Income tax) |
Local tax rate (Inhabitants tax) |
|---|---|---|
| Income earned from transfer of a property held for 5 years or less | 30.63% | 9% |
| Income earned from transfer of a property held for more than 5 years | 15.32% | 9% |
| Income earned from transfer of stocks, etc. | 15.32% | 9% |
Fiiling and payment
Under the self-assessment system in Japan, taxpayers who have taxable income must calculate the whole income earned for the year from January 1 to December 31.
Taxpayers need to file final income tax returns for income earned during a year by March 15 of the following year.
Foreign tax relief/Tax treaty
In case of a Japanese resident, you may be eligible for a foreign tax credit under certain requirements for taxes levied outside of Japan.
Furthermore, for residents of countries where a tax treaty has been concluded with Japan, taxation based on the treaty will be applied under the tax treaty.