Japan has lots of taxes. It isn’t that the tax rates are particularly high, but there are just a lot of categories. Yesterday, I submitted my return for my income taxes. I actually calculated my national income tax bill on the form itself, but the same information will also be used to calculate my local income taxes. Those are billed and paid separately, in three installments over the following year. The same information is used, again, to calculate my national health insurance premiums, but those are also paid separately, in monthly installments. My contributions to the national pension scheme are independent of income, and paid in one lump sum. You can pay monthly, but it’s cheaper if you pay all at once, up front. (Not much cheaper, but 3,000 yen is 3,000 yen.) Property tax, naturally, depends on the value of your property. That’s four installments, although they aren’t actually quarterly. (I split that with Yuriko, and when I asked for her half this time she said “I gave you property tax money in late December”. “Yes dear, that’s because I had to pay it in late December, too.”)
The basic system is very similar to the UK. Most people pay their taxes through the payroll, and don’t have to worry about it. I have to fill in forms, take them to the tax office, and then pay the last year’s taxes, plus estimates for the next year’s. The office assumes that your income will be constant; not always true, and you can ask for exceptions if necessary.
I have to fill in a form saying when I’ve been resident in Japan, so that they can determine which bits of my income are liable for Japanese tax. Last year, everything was, because I was a permanent resident for tax purposes: I had no definite plans to leave. This year, the rules changed, and since I’ve not been here for five years yet I don’t count as a permanent resident, which means that money earned outside Japan is only liable for tax if it comes to Japan. This actually makes no difference to me, but I still had to fill the form in.
Then there are forms to say where your income comes from. There’s a special one for authors, and I filled all my books in on that. This briefly confused the person taking the forms, because all the sections relevant to me were on the back; the front only had my name on.
Finally, there’s the actual return. The return is printed on carbon paper. The others aren’t. You get sent two copies of everything, and have to fill them in in duplicate so that you have your reference copies, stamped by the office to confirm that they’re what you actually submitted.
The biggest difference between the systemsÂ is what you get to deduct from your income. There’s a basic personal allowance, of course, although it’s lower here. You also get to deduct your health insurance and pension payments. The UK equivalent would be if you could deduct your National Insurance payments from your taxable income.
Japan also allows some deduction of charitable and political giving. If you give to approved charities, you get a certificate at the beginning of the year showing how much you gave them in the previous year. You then stick those on your tax form (literally – you glue them onto the back of one of the pages) and fill the numbers in the boxes. The first 5,000 yen is deducted, but after that you can simply substract from your taxable income.
As well as writing the numbers in, you have to write the names and addresses of the charities in a box on the form. I gave to three different registered charities, and I had to write really, really small to fit the information in the box. Are they trying to discourage people from supporting more than one charity?
Filling the forms in was relatively easy; my finances aren’t very complicated, and I keep good records. Then I had to take the forms to the tax office, stand in line, and hand them over. That didn’t actually take too long. Some people drove, and looking at the queue for the car park, they would probably spend longer in that queue than in the submission queue. The walk from the bus stop to the tax office was long enough for me to listen to the Yomiuri podcast, though.
The next stage is simply paying my taxes. That will happen by bank transfer, though, so I don’t have to worry about it. Money will just automatically vanish from my bank account.
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