Income tax in Japan is based on a self-assessment system (a person determines the tax amount himself or herself by filing a tax return) in combination with a withholding tax system (taxes are subtracted from salaries and wages and submitted by the employer).
Thanks to the withholding tax system, most employees in Japan do not need to file a tax return. In fact, employees only need to file a tax return if at least one of the following conditions is true:
- if they leave Japan before the end of the tax year
- if their employer does not withhold taxes (e.g. employer outside Japan)
- if they have more than one employer
- if their annual income is more than 20,000,000 yen
- if they have side income of more than 200,000 yen
Employees, who do not need to file a tax return, will have their national income taxes withheld from their salaries by their employer, and an eventual adjustment is made with the year's final salary. Prefectural and municipal payments have to be paid separately by the employee upon notification by the municipality.
People, who are required to file a tax return, such as self-employed persons, must do so at the local tax office (zeimusho) between February 16 and March 15 of the following year. The tax return for 2013 had to be filed between February 17 and March 17, 2014. Tax returns can also be filed by mail or online (e-Tax).
If not withheld by the employer, national income taxes are due in full by March 15 of the following year (mid April if you pay by automatic bank transfer), with two prepayments paid in July and November of the running tax year. Prepayments are calculated based on the previous year's income, i.e. you do not pay them during your first year in Japan.
For example, if you had to pay national income taxes for 2013, they had to be fully paid by March 17, 2014 (or April 22, 2014 in case of payment by automatic bank transfer), with the prepayments already paid in July and November 2013.
Prefectural and municipal income taxes are paid in quarterly installments during the following year. For example, the 2013 taxes are paid in four installments due in June, August and October 2014 and January 2015