A. Update
The Japanese government has introduced a special tax reduction benefit for resident employees, effective from June 1, 2024, to December 31, 2024. This benefit provides a fixed tax reduction based on the individual employee, their eligible spouse, and the number of eligible dependents.
Each qualifying person will be eligible for 30,000 yen tax reductions as below.
- A flat reduction of ¥30,000 for the taxpayer.
- An additional ¥30,000 reduction for each spouse or dependent.
Below are the two ways for availing the special tax reduction which will be applicable based on their eligibility criteria specified below.
1. Monthly Tax Reduction method:
- Calculated once in June and can be availed in subsequent months until exhausted.
- No income limit check is required.
- Only employees who joined on or before June 1, 2024, are eligible.
2. Year-End Tax Reduction method:
- Calculated and availed at the end of the year.
- Available for employees with a total income of 20 million yen or less.
- Only employees who joined on or after June 2, 2024, are eligible.
Eligibility Criteria
- Resident Employees: The special tax reduction applies only to resident employees.
- Income Tax for 2024: Only income tax for the year 2024 is considered. Any income from previous years (e.g., arrears from 2023) will be excluded from this calculation.
- Eligible Spouse: To qualify as an eligible spouse, the individual must:
- Be a resident.
- Have a total annual income estimated to be equal to or less than 480,000 yen (or 1,030,000 yen if the income is only from salary).
- Live together with the employee.
- Be declared as a dependent in the Dependent Declaration form.
Eligible Dependents: Dependents must meet the following criteria:
- Be a resident.
- Have no age restriction (above or below 16 years).
- Have a total annual income estimated to be less than 480,000 yen (or 1,030,000 yen if the income is only from salary).
- Live together with the employee.
- Be declared as a dependent in the Dependent Declaration form
Monthly tax reduction method:
- If monthly tax> Special tax reduction, then completely utilize the special tax reduction.
- if monthly tax< Special tax reduction, then there will be some balance left in the special tax reduction amount, which can be availed in next month, like wise it can be carried forward until it becomes zero.
- Employees whose tax reduction amount didn’t become 0 and the amount is left over will be adjusted during Year End.
Example Scenario:
Let's consider a household with the following composition:
- The taxpayer (primary earner)
- A spouse
- Two children (dependents)
Income Tax Reduction Calculation:
- Taxpayer: ¥30,000
- Spouse: ¥30,000
- Child 1: ¥30,000
- Child 2: ¥30,000
Total Income Tax Reduction:
¥30,000 (taxpayer) + ¥30,000 (spouse) + ¥30,000 (child 1) + ¥30,000 (child 2) = ¥120,000
In this example, the Total Special Tax Reduction amount for June 2024 to Dec 2024 is 120,000 Yen, which will be deducted from the monthly Income tax as per the guidelines issued by National Tax Agency of Japan.
Year-End Tax Reduction method:
During Year End, based on the new declaration form submitted by Employees, the special tax reduction is recalculated and adjusted during the Year End process.
For detailed information on the year-end adjustment procedure, the National Tax Agency of Japan is expected to release more details around end of September.
B. Statutory Release Date: April 01, 2024
C. Effective Date: June 01,2024
https://www.nta.go.jp/publication/pamph/gensen/teigakugenzei/136.pdf
A. Update
As per the recent amendment by Kyokaikenpo, the new Health insurance premium rate and Long-term care insurance premium rate (also known as Nursing Insurance) of the Japan Health Insurance Association for the 6th year of Reiwa i.e., 2024 will be applied from March 2024. Employer and employee contributes towards Health Insurance and Nursing Care Insurance in equal proportion.
The Health Insurance Premium rates are revised at prefecture level. For example, for Tokyo the rate is revised from 10% to 9.98%. For other prefecture contribution rates please refer the table available on appended link.
The Nursing-Care Insurance, a nationwide uniform long-term care insurance premium rate is revised to 1.60%
B. Statutory Compliance Release Date: February 08, 2024
C. Effective Date: March 01, 2024
A. Update
As per the recent amendment by Ministry of Health and Labor Welfare, the new unemployment insurance premium rate for the year April 1, 2023, to March 31, 2024.
The contribution rates for General business are amended as follow:
| Period From | Period To | Employer Contribution Rate (%) | Employee Contribution Rate (%) |
|---|---|---|---|
| April,2023 | March,2024 | 0.95 | 0.6 |
| October,2022 | March,2023 | 0.85 | 0.5 |
The above rates may vary for specific industries. Please refer to below link for further details.
B. Statutory Compliance Release Date: February 3, 2023
C. Effective Date: April 1, 2023
001050206.pdf (mhlw.go.jp)
A. Update
As per the recent amendment by national Health Insurance Association, the new Health insurance premium rate and Long-term care insurance premium rate (also known as Nursing Insurance) of the Japan Health Insurance Association for the 5th year of Reiwa i.e., 2023 will be applied from March 1, 2023. Employer and employee contributes towards Health Insurance and Nursing Care Insurance are in equal proportion.
The Health Insurance Premium rates are revised at prefecture level. For example, for Tokyo the rate is revised from 9.81% to 10.00%. For other prefecture contribution rates please refer the table available on appended link.
The Nursing-Care Insurance, a nationwide uniform long-term care insurance premium rate is revised from 1.64% to 1.82%. For example, for Tokyo the rate will be revise from 9.81%+1.64%= 11.45% to 10.00%+1.82%=11.82%. For other prefecture contribution rates please refer the table available on appended link.
B. Statutory Compliance Release Date: February 8, 2023
C. Effective Date: March 1, 2023
A. Update
The "Declaration of Exemption for Dependents" column was changed to "Declaration of Exemption for Dependents and Various Exemption Amount". In addition, the amount for various exemptions applicable for dependents has been added to facilitate the calculation of year-end adjustments.
B. Statutory Compliance Release Date: November 25, 2022
C. Effective Date: January 1, 2023
A. Update
- In accordance with the revision of the Income Tax Law (revision of the deduction for dependents related to foreign resident relatives), classification of "Non-resident relative" has been added.
- In accordance with the revision of Local Tax Law (revision of deduction for dependents related to foreign resident relatives), the column “Non-exempted dependent relative living in overseas” in
the section of "Dependents under 16 years old" under the category “Matters related to inhabitants tax” has been revised. Wherein if "Non-exempted dependent relative living in overseas" is indicated, submission of the confirmation documents correspondingly may be required. - New section of "Spouse or Dependent with Retirement Allowance" column has been added, wherein dependents’ personal information and other relevant details needs to be provided.
- A separate box for selection of “Widow or Single Parent” column has been added.
B. Statutory Compliance Release Date: September 19, 2022
C. Effective Date: January 1, 2023
A. Update
As per the recent amendment by Ministry of Health and Labor Welfare, the new unemployment insurance premium rate for the tax year April, 2022 to March, 2023 will be applied from April 2022.
The contribution rates for General business are amended in two parts as follows:
| Period From | Period To | Employer Contribution Rate(%) | Employee Contribution Rate(%) |
|---|---|---|---|
| April, 2022 | September, 2022 | 0.65 | 0.3 |
| October, 2022 | March, 2023 | 0.85 | 0.5 |
B. Statutory Compliance Release Date: March 31, 2022
C. Effective Date: April 01, 2022
A. Update
As per the recent amendment by Kyokaikenpo, the new Health insurance premium rate and Long-term care insurance premium rate (also known as Nursing Insurance) of the Japan Health Insurance Association for the 4th year of Reiwa i.e., 2022 will be applied from March 2022. Employer and employee contributes towards Health Insurance and Nursing Care Insurance in equal proportion.
The Health Insurance Premium rates are revised at prefecture level. For example, for Tokyo the rate is revised from 9.84% to 9.81%. For other prefecture contribution rates please refer the table available on appended link.
The Nursing-Care Insurance, a nationwide uniform long-term care insurance premium rate is revised from 1.80% to 1.64%
B. Statutory Compliance Release Date: March 11, 2022
C. Effective Date: March 01, 2022
A. Update
The National tax agency has released revised template of Complete Ledger Report. The changes in report are in presentation related to Single parent and Income Adjustment exemption declaration.
B. Statutory Compliance Release Date: May 17, 2021
C. Effective Date: January 01, 2021
A. Update
As per the summary of withholding tax revisions released by National Tax Agency for the third year of Reiwa/2021, following will be the impact on payroll:
- 1. The Taxable Retirement Income calculation procedure has been revised for the Retirement Allowance paid to employee whose service period is equal to or less than five years. According to the update the formula of taxable retirement income will be revised as follows:
| Condition | Taxable Retirement Income |
|---|---|
| If, Retirement Income net of Amount of deduction is less than or equal to 3,000,000 JPY | (Retirement Income – Amount of deduction) * 1 / 2 |
| If, Retirement Income net of Amount of deduction is more than 3,000,000 JPY | 1,50,000 JPY + {Retirement Income – (3,000,000 + Amount of deduction)} |
- 2. The seal on Dependent Declaration report is no longer required to be attached
B. Statutory Compliance Release Date: April 29, 2021
C. Effective Date: January 01, 2022
A. Update
The new format of Labour Declaration Form and Worksheet also known as Estimated Insurance Premium Report has been released by Ministry of Health, Labour and Welfare for 2021 reporting. The updated formats are available on the appended link.
In the new format, the details related to employees above age of 64 years have been deleted since from April 01, 2020 contribution can be made towards unemployment insurance irrespective of age.
B. Statutory Compliance Release Date: March 29, 2021
C. Effective Date: March 29, 2021
A. Update
As per the recent amendment, the new Health insurance premium rate and Long-term care insurance premium rate (also known as Nursing Insurance) of the Japan Health Insurance Association for the 3rd year of Reiwa i.e.2021 will be applied from March, 2021. Employer and employee contributes towards Health Insurance and Nursing Care Insurance in equal proportion.
The Health Insurance Premium rates are revised at prefecture level. For example for Tokyo the rate is revised from 9.87% to 9.84%.
The Nursing-Care Insurance, a nationwide uniform long-term care insurance premium rate is revised from 1.79% to 1.80%.
B. Statutory Compliance Release Date: February 16, 2021
C. Effective Date: March 1, 2021
A. Update
The Dependent exemption report for Reiwa 3 i.e. financial year 2021 has been updated by National Tax Agency. Apart from the tax year, new field to capture single parent is added and existing field with single parent receiving the child care rearing allowance is removed.
B. Statutory Compliance Release Date: November 18, 2020
C. Effective Date: January 01, 2021
A. Update
As per the recent update the ceiling of pension contribution on salaries is revised from 620,000 Yen to 650,000 Yen.
The Employer and Employee both contribute towards Pension in equal proportion. As such, the employer and employee both contribute 9.15% each from the monthly salary.
B. Statutory Compliance Release Date: September 02, 2020
C. Effective Date: September 01, 2020
A. Update
The National Tax Agency Japan has released the updated version of Withholding Tax Report.
Apart from the Japanese era, new fields are added to capture the Amount of Basic Exemption and the Amount of exemption of income adjustment (Additional Employment Exemption).
B. Statutory Compliance Release Date: June 05, 2020
C. Effective Date: January 01, 2020
A. Update
The Complete Ledger of Withholding Income tax for Employment Income has been updated. New fields to capture the amount of income adjustment and Basic exemption are updated in the template of report.
B. Statutory Compliance Release Date: May 21, 2020
C. Effective Date: Financial Year (FY) 2020
A. Update
The Application of Spouse exemption has been amended and the title has been changed to “Application for Exemption for Basic, Spouse and Income Adjustment”.
The amended form captures the detail related to Basic exemption, spouse exemption and Income Adjustment.
B. Statutory Compliance Release Date: April 21, 2020
C. Effective Date: Financial Year (FY) 2020
A. Update
A new single-parent deduction is established for singles who support children. As a result, the scope of Widow Deduction has been reviewed and Widower Deduction has been abolished.
In accordance with the revision the Widow deduction is now categorized as General Widow and Single Parent.
Single Parent is defined as the one who has not since remarried or whose spouse is not known to be living or dead and meets all three of the following conditions:
- a) Have a child living in the same household as the earner of salary;
- b) Total amount of employment income is 5,000,000 yen or less; and
- c) No one is found to be in a situation similar to a marriage relationship with that person.
The deduction amount for the taxpayer categorized as Single parent is 350,000 Yen.
Further, the general widow is defined as the person who is not categorized as Single parent and meets any of the following condition:
- a) Has not married after divorce, have dependents, and whose total income is 5 million yen or less; or
- b) Has not been married since the death of her husband, or a person whose husband’s death is not known and whose total employment income 5 million Yen or less.
The deduction amount for the taxpayer categorized as General Widow is 270,000 Yen.
B. Statutory Compliance Release Date: April 02, 2020
C. Effective Date: January 01, 2020
A. Update
Contribution Rates for Long term care insurance will be as under:
- Employee: 0.895%
- Employer: 0.895%
Contribution Rates for Health insurance premium will be as per the appended source.
B. Statutory Compliance Release Date: February, 2020
C. Effective Date: March 01, 2020
A. Update
Earlier the employees who were above 65 years were exempt from contributing towards Employment Insurance premium. However, with a recent amendment by Ministry of Health, Labour and Welfare employer needs to deduct contribution even on employees who are above 65 years of age.
B. Statutory Compliance Release Date: February, 2020
C. Effective Date: April 01, 2020
A. Update
The National Tax Agency has released the updated format of Dependent Exemption Report.
