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Tax TIPS in Japan for foreigners

For foreigners living in Japan, dealing with taxes can be one of the most challenging aspects because the tax system may differ from what they are accustomed to in their home countries. Here are some tips to help you navigate the Japanese tax landscape:

  1. Withholding Tax for Employers:

  • If you are an employer and have non-resident staff working in Japan for more than six months, you must withhold tax at a rate of 20.42%.

  • Regardless of the payment amount, this withholding tax applies. However, the employee can later seek a refund in their home country.

  1. Inheritance Tax for Non-Residents:

  • Non-residents with specialist or diplomat status who have lived in Japan for more than five years are subject to inheritance tax.

  • Additionally, non-residents with other statuses and resident individuals always pay inheritance tax on properties, both in Japan and their home country, within ten months of learning about the inheritee’s death.

  1. Tax Reform 2024:

  • The 2024 tax reform introduces a favorable treatment by deducting withholding income tax (¥30,000) and resident tax (¥10,000).

  • If your taxable income exceeds ¥18,050,000, you will also receive an additional salary in June. However, by year-end, you must repay this amount. Some may find this approach less advantageous for high-income earners.

Feel free to ask if you have any further questions or need additional assistance!

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