withholdingtax

Outline of Withholding Procedure

The employment income withholding process and the tax amount table and application form used for withholding are as outlined below. The tax amount table and application form, etc., are available at tax offices, and can also be found on the National Tax Agency’s website (www.nta.go.jp, in Japanese only).

(上記 国税庁HPより引用)

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2. Procedure for Withholding from Employment Income

The process of withholding from employment income paid to residents is broadly divided into the process of withholding from monthly (daily) salary and bonuses, etc., and the year-end adjustment process at the end of the year. The key points to consider here are: (1) the scope of taxable employment income, (2) the requirements for the application of various deductions, such as exemptions for spouses and dependents, and (3) how to use the tax amount table and the methods for specific tax amount calculations.
(Note) The definitions of resident and non-resident are unrelated to nationality or residence (visa) status. An alien worker having a domicile in Japan or a continuous residence in Japan for 1 year or more is subject to withholding as a resident.

(上記 国税庁HPより引用)

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Payment of Withheld Income Tax 3 Payment Procedure

Withheld income tax shall be paid at a local financial institution (such as a bank or post office) or over the counter at the competent tax office, together with submission of “Statement (Tax Payment Slip) of Collected Income Tax.” (所得税徴収高計算書(納付書))
The kinds and purposes of the Statement are as indicated in the table below. Upon payment, please record in the tax payment slip the reference number designated by the tax office without fail.
Withheld income tax can be paid and the statement submitted via the Internet (for details, please see the “e-Tax” website, www.e-tax.nta.go.jp, in Japanese only).

Statement (tax payment slip) of income tax collected from employment/retirement income, etc. (for general purposes and the special provision for due dates)

Employment income, retirement allowances, and remuneration/fees paid to attorneys at law and tax accountants, etc.

Statement (tax payment slip) of income tax collected from remuneration/fees, etc.

Remuneration/fees other than remuneration/fees paid to attorneys at law and tax accountants, pensions paid under a life insurance contract, casualty insurance contract or similar annuity agreement, or public pensions

Statement (tax payment slip) of income tax collected from interest, etc.

Interest, distribution of revenue from an investment trust or trust issuing specified beneficiary certificates, and distribution of profits under a silent partnership (Tokumei-Kumiai) contract

Statement (tax payment slip) of income tax collected from dividends, etc.

Dividends (excluding distribution of revenue from an investment trust or trust issuing specified beneficiary certificates)

Statement (tax payment slip) of income tax collected from income of a non-resident/foreign corporation

Various types of income paid to a non-resident or a foreign corporation (excluding profit from redemption of discount bonds and consideration for the transfer of listed stocks kept in a specific account for which withholding has been chosen)

Statement (tax payment slip) of income tax collected from redemption profit

Profit from redemption of discount bonds

Statement (tax payment slip) of income tax collected from compensation payments for benefits from installment deposits, etc.

Compensation money for benefits from installment deposits and monetary awards from deposits offering such awards, etc.

Statement (tax payment slip) of income tax collected from adjusted amount of income from any listed stock account for which withholding is chosen

Consideration for the transfer of listed stocks kept in a specific account for which withholding is chosen

(上記 国税庁HPより引用)

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Payment of Withheld Income Tax 2 Special Provision for Due Date

(1) Special provision regarding due dates
Any withholding agent that pays salaries to fewer than 10 employees on a regular basis and submits an “Application for Approval Made in Relation to the Special Provision for Due Dates for Withheld Income Tax” (源泉所得税の納期の特例の承認に関する申請書)and obtains such approval may take advantage of a special provision regarding the due dates for income tax withheld from salaries, retirement allowances and remuneration/fees paid to tax accountants, etc. Under this arrangement, payment can be made twice a year as indicated below.
If no notice of approval or denial of the application has been received from the district director of the competent tax office by the last day of the month following the month in which the application was submitted, the special provision shall be deemed to have been approved at the end of the month following the month inwhich the application was submitted and shall apply to tax payments made in the second month following the month in which the application was submitted.
Classification of withheld income tax
Due date
Income tax withheld between January and June
July 10
Income tax withheld between July and December
January 10 of the following year
(Note) 1 Income tax to which the special provision for due dates applies is limited to the following:
i) Income tax withheld from salaries and retirement allowances (including those for non-residents).
ii) Income tax withheld from remuneration/fees as provided for in Item 2 of Article 204, Paragraph 1 of the Income Tax Act paid to attorneys at law (including foreign lawyers licensed in Japan), judicial scriveners, real estate surveyors, certified public accountants, tax accountants, social insurance labor consultants, patent attorneys, marine procedure commission agents, surveyors, architects, real estate appraisers, professional engineers, etc.
2 Any application submitted by post or correspondence delivery (hereinafter referred to as “mail”) shall be deemed to have been submitted on the date indicated by the date stamp on the mail.
(2) Special provision regarding extension of due date
If a withholding agent that has received approval for an application made in relation to the special provision for due dates under (1) above submits an “Application Under the Special Provision on the Extension of the Due Date Pertaining to an Approval Under the Special Provision on Due Dates” (納期の特例適用者に係る納期限の特例に関する届出書)to the district director of the competent tax office, the due date for payment of income tax withheld between July and December of each year after the year in which the application is submitted shall be January 20 of the following year.
If any of the following events occurs in any year after the year of application, however, the special provision regarding extension of due dates shall not apply, and the due date for income tax withheld between July and December of the relevant year shall be January 10 of the following year.
A. Any delinquency in payment of withholding income tax as of December 31 of the relevant year; or
B. Failure to pay income tax withheld between July and December of the relevant year by January 20 of the following year.
(Notes) 1 Any application submitted by mail shall be deemed to have been submitted on the date indicated by the date stamp on the mail.
2 Any such application may be submitted together with an application for approval under the special provision regarding due dates under (1) above.

(上記 国税庁HPより引用)

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Payment of Withheld Income Tax 1 Due Date for Payment

Income tax withheld by a withholding agent shall in principle be paid by the 10th of the month following the month in which the income subject to withholding was paid.
If the due date is a Saturday, Sunday, or holiday, the next business day shall be the due date.
If payment is not made by the due date, the withholding agent may in principle have to pay delinquent tax and additional tax for non-payment.

(上記 国税庁HPより引用)

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Timing of Withholding

Withholding of income tax occurs when the income subject to withholding is actually paid. Even if the income should be paid, no withholding is in principle necessary unless actual payment is made.
(Note) “Payment” for the purpose of withholding includes not only actual delivery of cash, but also all other acts to extinguish the payment obligation such as a transfer to a principal and/or to a savings account.

(上記 国税庁HPより引用)

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Scope of Income Subject to Withholding

The scope of income subject to withholding is as shown in the following table.
Each of the main items is considered separately in more detail below.
Beneficiary
Kinds of income subject to withholding
Resident
(an individual having a domicile in Japan or an individual who resides continuously in Japan for 1 year or more)
1 Interest, etc.
2 Dividends, etc.
3 Salary, etc.
4 Retirement allowance, etc.
5 Public pension, etc.
6 Remuneration/fees, etc.
7 Pension based on a life insurance contract, casualty insurance contract, or similar annuity agreement
8 Compensation money for benefits from installment deposits, etc.
9 Distribution of profits under a silent partnership (Tokumei-Kumiai) contract
10 Consideration for the transfer of listed stocks kept in a specific account, etc.
11 Monetary awards, etc. from deposits offering such awards
12 Profit from redemption of discount bonds
Domestic corporation
(a legal person having a head office or principal place of business in Japan)
1 Interest, etc.
2 Dividends, etc.
3 Compensation money for benefits from installment deposits
4 Distribution of profits under a silent partnership (Tokumei-Kumiai) agreement
5 Horse racing prizes received by a horse owner
6 Monetary awards from deposits offering such awards, etc.
7 Profit from redemption of discount bonds
Non-resident
(an individual other than a resident) or a foreign corporation (a legal person other than a domestic corporation)
1 The following forms of consideration sourced from Japan:
(1) Profits arising from partnership contract business conducted in Japan;
(Note: “Partnership contract business” is business conducted under a partnership contract provided for in Item 1-2, Article 161 of the Income Tax Act.)
(2) Consideration for the transfer of land, etc., in Japan;
(3) Consideration received by a person doing business that involves the provision of personal services in Japan;
(4) Consideration for leasing of real estate, vessels, aircraft, etc., in Japan and consideration for arranging land use rights, etc.;
(5) Interest, etc., on funds deposited in a business office in Japan;
(6) Dividends of surplus, dividends of profit, distribution of surplus or interest on funds received from a domestic corporation, distribution of revenue from an investment trust (excluding bond investment trusts and publicly offered bond investment trusts) or trust issuing a specified beneficiary certificate entrusted to a business office in Japan, etc.;
(7) Interest on a loan pertaining to a domestic business for a person doing business in Japan;

(8) Royalties for any industrial property right, copyright or neighboring right, or consideration for the transfer thereof, pertaining to a domestic business from a person doing business in Japan
(9) Any amount sourced from work in Japan among remuneration paid for the provision of personal services including non-resident salary, certain amounts of public pensions, etc., and any retirement allowances sourced from work performed while the beneficiary was a resident;
(10) Awards for the advertising of a business in Japan;
(11) Pensions based on life insurance contracts or casualty insurance contracts made through domestic business offices;
(12) Compensation money for benefits from installment deposits accepted by domestic business offices, etc.; and
(13) Distribution of profits received under any silent partnership (Tokumei-Kumiai) contract pertaining to a contribution to a person doing business in Japan.
2 Distribution of profits from foreign special purpose trusts and revenue from foreign special investment trusts.
3 Consideration for the transfer of listed stocks kept in a specific account and received by a non-resident having a permanent establishment in Japan
4 Monetary awards from deposits offering such awards, etc.
5 Profit from redemption of discount bonds

(上記 国税庁HPより引用)

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Submission of Notification on the Relocation (Closure) of a Salary-paying Office

A salary payer shall submit a “Notification on the Relocation (Closure) of a Salary Paying Office” (給与支払事務所等の移転(廃止)届出書)within one month of the date of occurrence of any of the following events:
(1) Discontinuation of salary payments due to the dissolution, closure or suspension of a business, etc.;
(2) Cessation of salary payment handling activities by any branch or business office; or
(3) Relocation of an office that handles salary payments.

(上記 国税庁HPより引用)

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Submission of Notification on the Establishment of a Salary-paying Office

A salary payer shall submit a “Notification on the Establishment of a Salary-paying Office” (給与支払事務所等の開設届出書)within one month of the date of occurrence of any of the following events:
(1) The establishment of a new office that handles salary payments (e.g. the establishment of a corporation or the opening of a branch or business office); or
(2) The commencement of salary payment handling activities by any branch, business office, or similar establishment.

(上記 国税庁HPより引用)

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Place for Payment of Withheld Income Tax

Income tax withheld by a withholding agent shall be paid to the competent tax office for the place where tax is paid. The place for payment of withheld income tax shall, in principle, be the location of the office, establishment, etc., as it exists on the date income is paid, where the income payer pays the income subject to withholding.

(上記 国税庁HPより引用)

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