Chapter 4: Special tax collection (individual residence tax)

1.How to pay individual residence tax?

There are two payment methods: "special collection" and "normal collection”.

For salaried workers, the tax will be collected from their monthly salary from June to May of the following year (special collection).

For other people, they pay the tax in four installments a year (normal collection) using the tax notice sent by the municipality.

2. Articles 321-4 of the local tax law states as following.

For salaried workers, as a special tax collector, the employer (payroll taxpayer) is required to collect individual residence tax of all employees.

This is a system in which business owners (salary payers) deduct individual residence tax (*1) from employee salaries every month on behalf of their employees (taxpayers) and deliver the tax.

Delivery due date is the 10th of the following month.

If an employee (*2) was paid a salary during the previous year and is paid a salary on April 1st of the current year, business owners (salary payers) must, in principle, collect a special tax.

(*1) Individual residence tax is levied and collected by the ward, town, or village where employees (taxpayers) live as of January 1st.

(*2) Employees(taxpayers) include short-term employees, part-time employees, officers.

NAKAJIMA TAX & ACCOUNTING OFFICE provides one-stop “Accounting”, “Taxes”, and “Payroll” outsourcing service for foreign companies starting up business in Japan and foreign founders starting up business in Japan.

NAKAJIMA TAX & ACCOUNTING OFFICE also assists to prepare year-end Financial Statements closing and e-filing Corporate Tax Return and Consumption Tax Return.

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