Japan - Other taxes and levies 

Social security tax

Are there social security/social insurance taxes in Japan? If so, what are the rates for employers and employees?

Employer (as of 1 April 2011)

* Maximum per year.

Employee (as of 1 April 2011)

* Maximum per year.

Social insurance

The social insurance program in Japan consists of health insurance, nursing care insurance, pension insurance, employment insurance and workmen’s accident compensation insurance.

Health insurance is a system of paying medical care benefits and allowances to employees and their families.

The Employees’ Pension Insurance System aims to guarantee a stable life to the employees and their families by paying them benefits when the employees retire are disabled due to illness or injury, or in the event of their death.

Every individual who meets the prescribed conditions is expected to participate in these systems as an insured person, regardless of nationality. Individuals who are paid from outside of Japan are generally not required to participate in these systems.

Non-Japanese employees that leave Japan can claim a refund of employee national pension contributions. The employee must have paid contributions for at least six months to be eligible for the refund. Refunds will be given for up to three years of contributions. The amount of the refund depends on how long the employee made contributions and the average standard monthly remuneration.

The maximum standard remuneration for purposes of calculating the refund is JPY620,000.

Japanese governmental health, nursing, welfare pension, and employment insurance premiums are deductible in calculating taxable income. Generally, it should be noted that foreign social insurance premiums are not deductible.

back to top

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Japan?

The gift tax is imposed on taxable properties acquired by gift in a calendar year less an annual exemption of JPY1.1 million. A donee domiciled in Japan is taxed on all gifts of property regardless of their location. A donee that does not have a domicile in Japan is basically taxable only on gifts of property located in Japan at the time of the gift. (If the donee is a Japanese national, an exceptional rule can be applied.)

Land value tax is paid on leasehold and freehold land owned by individuals or corporations as of January of each year. However, this tax is frozen at present.

An individual who acquires property by inheritance or bequest and who is domiciled in Japan at the time of acquisition of such property is referred to as an unlimited taxpayer. The entire property acquired by an unlimited taxpayer by inheritance or bequest is subject to inheritance tax.

An individual who acquires any property located in Japan by inheritance or bequest and who has no domicile in Japan at the time of acquisition of such property is referred to as a limited taxpayer. (If the individual is a Japanese national, an exceptional rule can be applied). A limited taxpayer is basically liable for inheritance tax on the inherited property located in Japan only, regardless of inherited property located outside Japan.

Certain exemptions and allowances are permitted in the computation of taxable property.

Inheritance tax rates range from 10 percent to 50 percent, with a 20 percent surtax on transfers to non-family heirs, as follows:

back to top

Real estate tax

Are there real estate taxes in Japan?

The sale or other transfer of real estate is subject to real estate registration tax. The owners of property (including land, building and depreciable tangible assets) as of 1 January of each year are subject to a fixed property tax.

back to top

Sales/VAT tax

Are there sales and/or value-added taxes in Japan?

Consumption tax is imposed on goods and services at all levels. The tax rate is 5 percent (including 1 percent for local consumption tax).

back to top

Unemployment tax

Are there unemployment taxes in Japan?

Please see Social Security Tax Section.

back to top

Other taxes

Are there additional taxes in Japan that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Local taxes

Resident individuals are self-employed are subject to a local enterprise tax on income from businesses or professions within Japan at rates ranging from 3 percent to 5 percent, depending on the type of business.

© 2012 KPMG Tax Corporation, a tax corporation incorporated under the Japanese CPTA Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.