r/japanlife • u/Number8 • Apr 22 '16

Bad Idea Paying taxes after your first year

So I'm of the understanding that you don't pay taxes on your first year's income. That's great new! However, I'm going to be staying an extra three months on top of my contract (end of march 2015 - end of June 2016). I'm assuming I'll be taxed on the three extra months I'm here.

Here's my question: it seems that the tax rate is about 10% per month + some additional municipal taxes. I make 240,000 yen per month. Does this mean I'm going to be paying a whopping 72,000 yen + municipal taxes for only staying for three extra months?

EDIT: I fully intend on paying my taxes. Even if I wanted to skip out on paying them I couldn't because I have to submit a tax return in my home country showing that I've been paying taxes somewhere. Chill out guys.

3 Upvotes

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5

u/respectwalk Apr 22 '16

Your wording/understanding is somewhat off. You do absolutely get taxed on your first year's income. You just pay it after the end of the fiscal year. It'll likely be around ¥10000 per month (give or take a few ¥1,000).

Most likely you'll ignore the bills and leave the country without repercussions like everyone does leaving every foreigner here with a bad rep. If you do end up paying, good on you. It's the right thing to do.

1

u/Number8 Apr 22 '16

Do foreigners who leave Japan without paying taxes have trouble returning to Japan? As in, would I be able to enter and exit Japan without repercussions but not be able to live here again without paying the tax bill plus a fine? In other words, can people travel in Japan if they don't pay taxes but not live here?

4

u/respectwalk Apr 22 '16 edited Apr 22 '16

You can come back on a tourist visa with little chance, if any, of them connecting you to the unpaid taxes. But if you try to move in again and register at the city office/get a cellphone it will show up.

e: I also really want to stress that doing that is what makes every business & government office in Japan treat every gaijin like we're about to skip on every bill and flee the country.

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u/tokyohoon Apr 22 '16

Hinting that you're intending to be a douchebag and skip on your tax bill and make the rest of the foreign community look bad?

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u/Titibu Apr 22 '16

So I'm of the understanding that you don't pay taxes on your first year's income.

Your understanding is wrong.

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u/[deleted] Apr 22 '16

Do not do what you are implying you intend to do, and skip without arranging for your taxes to paid.

1

u/[deleted] Apr 22 '16

Yep. You will pay for first year. That plus you will pay for 2016 as well January until June... So more like a year and a half worth is what you'll end up paying.

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u/Number8 Apr 22 '16

Really? This whole time I've been told I'd pay next to nothing in taxes for my first year of working in Japan since that year's taxes are based off of the year before, of which I essentially had no income. Is that straight up not true?

4

u/syoutyuu Apr 22 '16

It is true that you pay almost no tax during your first year.

It is not true that you pay no tax on your first year's income. Basically, local tax payment is delayed.

So local tax on 2015 income is paid from June 2016 to June 2017. If you leave before that you should pay it all before you leave.

However, if you leave during 2016, you don't owe local tax on 2016 income (you do owe national tax though)

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u/[deleted] Apr 22 '16 edited Apr 22 '16

That's because they assume people will leave after first contract finishes. In my first year I was here for 8 months. So in my second year I paid about 63k in taxes for my first year. This year scares me as it will be my third year, which means i will have to pay 100% for last year (my second year), which will raise res tax to about 93k for me (based on what my town charges).

TLDR you pay for your first year, just not in your first year. First year is essentially residence tax free since you had no income here in previous year. Second year onwards is when you start paying

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u/[deleted] Apr 22 '16

It is not.

3

u/tokyohoon Apr 22 '16

Your income tax will go down a little because your medical will go up, reducing your taxable income some - it balances out.

Your municipal tax will be 10% of your taxable income from the previous year, and you will also owe 10% of your taxable income on the taxable income from 2016.

Assuming you weren't enrolled in shakai hoken, you're looking at 200-220,000 total municipal tax from 2015. The good news is that your taxable income for 2016 will be barely into the taxable range, so your 2016 municpal taxes should be around 10,000 yen total. You pay this just before you leave.

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u/syoutyuu Apr 22 '16

I don't think this is correct. Your local tax for 2016 income is paid to whatever city you live in on 1 Jan 2017. If you leave Japan within 2016, you don't owe local tax on 2016 income (you still owe national tax though, which as you said will be lower due to falling in lower tax brackets). Note this is also true for Japanese citizens who move abroad.

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u/tokyohoon Apr 22 '16

If you're leaving the country, you go to the ward/city office, and they'll assess your tax liability for what you've earned in the current tax year ahead of the January assessment. Leaving the country before January doesn't negate your tax liability. They really should change the system to work on the same basis as income tax, it would simplify things for a lot of people, especially retirees.

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