how much tax is correct?

[karekora]

Im always amazed at how much I get taxed in Tokyo. I worked it out last pay check that I get taxed 20% of my original wages, which leaves me with just about enough to pay my rent....forget eating or going out. Is it because its my first year in tokyo that I'm getting taxed this much (it'll be my first and last year in tokyo) or is my boss diddling me??

i never got taxed that much in london, or at least, it never felt like that much.

20%?! - normal?

[Tsuru]

20% is actually very little where I come from... here income tax is more along the lines of 25 to 30%

So consider yourself lucky The fact that you don't have anything to spare I think has a little more to do with the insanely high housing prices here.

[sillygirl]

I never got taxed that much, more like 6% -ish.

You should get a tax rebate in April. Speak to your boss....

[B Gallagher]

hmmm.. income tax in NZ is really high - I'm paying 19.5% tax, and I'm earning less that 10,000 NZD a year!

So by comparison, tax in Japan doesn't sound that bad, especially with tax rates for higher incomes in NZ being much higher (30+%).

Regardless, tax everywhere is evil. :P

[B Gallagher]

no edit button - I finally know how it feels. :P

Why is it April which is the start/end of the financial year (at least here and in Japan)? Why not January?

[nullpointer]

The Income tax rates as listed in my copy of the MOF addendum are.

0--------------3,300,000 ---> 10%
3,300,000----9,000,000----> 20%
9,000,000----18,000,000 --> 30%
18,000,000---30,000,000 --> 40%
30,000,000---above --------> 50%

[dimwit]

The Income tax rates as listed in my copy of the MOF addendum are.

0--------------3,300,000 ---> 10%
3,300,000----9,000,000----> 20%
9,000,000----18,000,000 --> 30%
18,000,000---30,000,000 --> 40%
30,000,000---above --------> 50%

That is your taxable income rate Not your income tax rate. Your taxable income rate is ranges fr om 70 to 95% of your total income.

To be paying 20% income tax your income would have to be in the range between 12-14 million a year. and if you are making that kind of money and are still broke than it is time to cut down on the caviar. So my guess is that your boss is either ignorant or screwing you.

A very rough calculation yields the following figures.
At 5,000,000 a year with a basic personal deduction your tax rate is 4.7%
At 10,000,000 a year with a basic you pay about 13.6%
At 15,000,000 a year you pay about 23%.

[FG Lurker]

It also depends on what you count as "tax". Income tax is not too bad here. But you get nailed for so many other taxes too. Residence tax. National Health. Pension. Owning a car or land makes it worse -- much worse!

It's a lot better than Canada, but I still end up paying something over 20% overall. That's with two dependants too. (That doesn't inlcude car or land taxes either of course.)

[hakuman]

It could also be your visa status. Are you on a working holiday visa? If you are, your taxation rate will be 20% as you are deemed a non-resident by the government (you have to live in Japan for over a year to be a resident, and WH visas are only good for one year).

If you have a working visa you can expect to pay about 5% plus city taxes which come once a year.

[FG Lurker]

It could also be your visa status. Are you on a working holiday visa? If you are, your taxation rate will be 20% as you are deemed a non-resident by the government (you have to live in Japan for over a year to be a resident, and WH visas are only good for one year).

I've heard this before too... But long ago when I had a WH visa (two of them in fact) I didn't pay more tax than anyone else. Definitely under 10% overall. My visas were in 1993 and 1995 though.

If you have a working visa you can expect to pay about 5% plus city taxes which come once a year.

Not if your salary goes up...

[hakuman]

the 20% tax on a working holiday visa is current info. However, this law only came into effect in late 99 (or early 2000, cant remember) so it wouldnt have been that way in the early 90s.

[nullpointer]

To be paying 20% income tax your income would have to be in the range between 12-14 million a year.

That sounds about right. I know someone who makes 12,000,000 p.a. and his take home salary (after tax, health insurance, unemployement insurance etc.) come around 750,000 per month. Maybe you are getting screwed at your place of work. I would get that salary slip double checked by someone who understands how japanese deductions work.

[karekora]

im on a working holiday visa so i guess 20% is right, unfortunately...!!

thanks for your comments all

[hakuman]

Thats what I figured. Oh well, at least you get to live in Japan! Enjoy it while you can!

[IkemenTommy]

Along the same topic, how are does the nenkin (social security, retirement tax, or whatever you want to call it) apply to us gaijins? I am here with a working visa and I am paying just as much the regular J-salary men but I will probably never see the paycheck when I retire. I have this feeling that I will be denied because I am not pure a japanese citizen. On top of that nenkin will be disfunct and nonexisting by the time I'm old enough to receive it. Anyway the nenkin being deducted out of every paycheck is bullcrap.

[hakuman]

If you pay for 25 years you are eligible for it regardless of nationality. Thats how they justify making us pay for it.
If you leave before 25 years, you can claim back some money (about 90% of up to 3 years worth of payments).

[Akito]

I'm on a WH Visa and only pay around 5%. A mistake by my company?

[hakuman]

Mistake by your company. If you are lucky, you will leave the country and no one will ever notice the difference. If you are unlucky, they will ding you at some point and you will be fucked.

Dont file (or let your company file for you) income tax this year! It comes around at the end of Dec. A lot of companies will do it for you, tell them you know someone who is going to do it for you, and just get the paperwork from them and dont do it.

[FG Lurker]

Usually I don't pay much attention to my pay slips... The money comes in, the money goes out... All this discussion made me take a look at mine a bit closer yesterday though. I'm paying 35,000yen per month into the retirement scam! Holy shit!!! I was not impressed by this to say the least. The company is of course paying a matching share so it is 70,000yen per month in total.

Now that I have my permanent residence and the house loan has all cleared I think I am going to start checking into escape routes. I don't mind paying medical/city tax/income tax as I make use of all these services (however occasionally it may be), but there is no way in hell that I will be using Japanese retirement benefits. It is doubtful the system will even exist in 35-or-so years when I would (in theory) become eligible.

Has anyone escaped from the retirement system here, and do you have any suggestions?

[IkemenTommy]

The easy solution is have the nenkin retirement system go bankrupt so we don't ever have to deal with it.

Does anyone ever report their income back to the U.S. federal government? My father says I should file my taxes, though I think it is a load of bull crap. I'm already getting reamed up the ass enough here.

[FG Lurker]

The easy solution is have the nenkin retirement system go bankrupt so we don't ever have to deal with it.

It won't go bankrupt for another 10 to 20 years... I don't want to pay into it that long! ]Does anyone ever report their income back to the U.S. federal government? My father says I should file my taxes, though I think it is a load of bull crap. I'm already getting reamed up the ass enough here.[/quote]
Thankfully I am lucky enough to not be from one of the two (I think?) countries in the world that are arrogant enough to tax their non-resident citizen's earnings.

[D.]

Just a few points on taxes and social security in Japan:

1) For those of you who are U.S. citizens or green card holders, you are subject to tax on your worldwide income (e.g. income you earn in Japan, or anywhere else), but some or all the foreign earned income may be exempt from tax in the U.S. Basically, the first $80,000 is not taxable in the U.S. At any rate, you should file a tax return in the U.S., but that doesn't necessarily mean you will have any tax liability in the U.S. (see http://www.irs.gov/faqs/faq13-7.html for details). If you don't file a tax return, that might draw the attention of the IRS.

2) The Ministry of Finance has a decent tax guide (2004) that explains a lot of the questions I've seen in this thread (http://www.mof.go.jp/english/tax/taxes2004e.htm).

3) Need to make a distinction between marginal and effective tax rates. The table posted above was an old tax table. The current one is essentially the same, only the 50% bracket is gone. Annual income above 18 million yen is taxed at a top rate of 37%. The lower brackets haven't changed. Anyway, your marginal rate is the rate you pay on your last 100 yen of income. So someone making 12 million yen per year will be taxed at 30% on income between 9 and 12 million. The effective tax rate is the total amount of taxes you paid relative to you total income. For most taxpayers, this will come out to about 10% to 20%, depending on exemptions and deductions. The adminstration of the tax system in Japan is a bit different though, then what many people might have experienced in their home countries. The system is designed to be mostly invisible. Most taxpayers in Japan do not file an annual tax return and do not know how much they pay in taxes with regard to an effective tax rate. Their employers deduct taxes from paychecks based on a very exacting withholding tables, so that at the end of the year, only a slight adjustment is needed to make taxes due correct. Large refunds or surprise tax bills are avoided. Individuals in Japan under special programs or visas may also be eligible for specific tax breaks.

4) With regard to social security pensions in Japan (the National Pension Plan (Kokumin Nenkin) and the Employees Pension Insurance Plan (Kosei Nenkin), they are two sides of the same coin. The first is for everybody in Japan (and technically Japanese abroad between age 19 and 59). Everyone is supposed to pay 13,580 yen per month for the NP, but a lot of students and the self-employed blow it off. The EPIP contribution from employees and employers includes an NP component. So employees of most firms don't have to worry about the separate NP contribution. A number of local govs. in Japan have web sites explaining the plans in English and other languages. When you leave Japan, you can, as pointed out, apply for a refund (this is progress, wasn't always the case). If you don't get a refund, the contributions will not be entirely wasted. Depending on your country of origin, a social security treaty may apply. (See http://www.ssa.gov/international/inter_intro.html) The treaties operate by giving you credit for the time you contributed to another country's system. A treaty between the U.S. and Japan has been signed and is expected to take effect in late 05 or early 06. Japan has a few treaties wth other countries currently in effect such as S. Korea and Germany. The point of all this is that although the systems are currently in trouble, they will continue to exist. Despite all the rhetoric about system bankruptcies and such, they are at core a tax. They will not dissappear until millions of taxpaying voters agree to give up their benefits. I'm not saying that the benefits won't be reduced. Just that government's are going to have to make some hard choices, and I doubt any sane pol is going to just shut off the tap on millions of retirees.

Hope this is helpful.[/b]

[homesweethome]

This came in the mail today to me and my wife. It basically says that if we don't pay the kokumin nenkin tax, they will foreclose and seize our assets. There is no number just my name and address. I belong to the system, but it seems to me a hollow threat unless they want to go after 1/3 of the country that is in arrears.

How seriously should this be taken? I think it is just a scare tactic at the moment.

[IkemenTommy]

If you don't pay and you try to leave the country, they may hold you in custody in that Narita underground custom's and immigration office with no windows. I've been down there twice already (long story) and I can only tell you that it's not the most fun place in the world.