Income tax and Resident tax|Tax consultation in Sapporo, let's contact Kumagai Nobuyasu accountant office!

In June, the resident tax notification is delivered to indivisual tax payer in Japan.
Some blog readers cannot understand what are tprogehe difference between income tax and resident tax.I am often asked this matter from my clients.
So, I explain the difference between income tax and resident tax in general.
First, I explain about the income tax. Next, I explain the resident tax and the comparison of those two taxes.
 

Income tax is taxed by the Japanese government. Actual national tax authority is Kokuzeicho (National Tax Agency). 
The final calculation of income tax is based on tax return filing in principle, while by year end final tax adjustment if there is only salary income in a year. The term of tax return filing in Japan is from February 16th to March 15th every year. 
The income tax rate depends on the amount of total income because progessive taxation is applied for the calculation of income tax. 
Income tax is taxed to;

1. worldwide income of residents in Japan (however, remittance limitation is applied for the foreign source income received in foreign countries of the non-Japanese nationality resident who lives in Japan less than five years in total life time.)   
2. Japan domestic source income of non-residents in Japan

Whether resident or non-resident is decided by actual residence, length of stay, working place and so on under the income tax act and the tax treaties.
 

Resident tax consists of two local income taxes;

1. Prefectural income tax
2. Municipal income tax

Those taxes are taxed to residents by the local government where they live. Therefore, no resident tax is taxed to non-residents in Japan.
Actually, municipal government where a resident have the substantial residence taxes those two local income taxes during the period from June to May of the following year.
There are mainly two tax payment methods for resident tax.

1. Normal levy: The method which a resident pays in quaters with the payment slips that municipal government sent or by electronic payment
2. Special levy: The method which the working place withholds from resident's monthly salary 

The resident tax calculation consists income-based flat-rate taxation and fixed amount taxation.
Usually, the resident tax is not covered by tax treaty. The income used for tax calculation is the taxable income of previous year. Therefore, resident tax is taxed one year later.
 

In this blog article, I explained the individual income taxation in Japan.
I am often asked about resident tax and national income tax from my clients. It is more complex income taxation than the one of other coutries. 
I explain the supplemental information for people who move to or from Japan. The taxable persons of resident tax are the Japan resident as of January 1st every year. If you move to Japan after January 2nd, you are not taxable for the resident tax, however you are taxable if you leave Japan before January 1st next year. The way non-resident in Japan pay the resident tax are two way;

1.  Paying once before you leave Japan
2.  Appointing a resident in Japan as your tax payment agent and paying to the tax authorities by your tax agent

If you have any questions about income taxation in Japan, please feel free to ask me! You can send a message by clicking "お問い合わせはこちら" below icon.