Types of taxes and Tax Rates in japan

Types of Taxes

Taxes in Japan are paid on income, property and consumption on the national, prefectural and municipal levels. Below is a summary of some of the most relevant types of taxes paid by individuals:

	Income Tax
	Paid annually by individuals on the national, prefectural and municipal levels. Also known as "resident tax" on the prefectural and municipal level. The amount is calculated based on the net income of the individual person.
	Enterprise Tax
	Prefectural tax paid annually by self-employed individuals engaged in business activities. The amount is calculated based on the person's net income and the type of business.
	Property Tax
	Municipal tax paid annually by individuals who own land, housing and other types of depreciable assets.
	Consumption Tax
	Paid by consumers when they purchase goods and services. The rate is currently 8% and is scheduled to be increased to 10% in October 2015. Shops and other service providers are required to include the consumption tax in the prices shown.
	Vehicle related Taxes
	A prefectural automobile tax is paid annually by individuals who own a car, truck or bus. In case of passenger cars, the amount is calculated based on the engine displacement. A municipal light vehicle tax is paid annually by individuals who own motorbikes or other motorized light vehicles. A national motor vehicle tonnage tax is paid by vehicle owners at the time of the mandatory inspections (shaken). A prefectural automobile acquisition tax is paid by persons when they acquire a car.
	Liquor, Tobacco and Gasoline Taxes
	The national liquor tax is paid by consumers when they purchase alcoholic beverages. National, prefectural and municipal tobacco taxes are paid by consumers when they purchase tobacco products. A national gasoline tax is paid by consumers when they purchase gasoline. The liquor, tobacco and gasoline taxes are included in the prices shown by shops.

Income Tax Return

Income Tax

Income tax is paid annually on income earned during a calendar year.

For tax purposes, people living in Japan are classified into three categories. This categorization is not related tovisa types:

	Non-Resident
	A person who has lived in Japan for less than one year and does not have his primary base of living in Japan. Non-residents pay taxes only on income from sources in Japan, but not on income from abroad.
	Non-Permanent Resident
	A person who has lived in Japan for less than five years, but has no intention of living in Japan permanently. Non-permanent residents pay taxes on all income except on income from abroad that does not get sent to Japan.
	Permanent Resident
	A person who has either lived in Japan for at least five years or has the intention of staying in Japan permanently. Permanent residents pay taxes on all income from Japan and abroad.

The tax rate is determined based on the taxable income. Like in other countries, taxable income is the total earnings minus a basic exemption, exemptions for dependents and various types of deductions, such as deductions for insurance premiums, medical expenses and business expenses of the self-employed.

National Income Tax Rates
Taxable Income	Tax Rate
less than 1.95 million yen	5% of taxable income
1.95 to 3.3 million yen	10% of taxable income exceeding 1.95 million yen plus 97,500 yen
3.3 to 6.95 million yen	20% of taxable income exceeding 3.3 million yen plus 232,500 yen
6.95 to 9 million yen	23% of taxable income exceeding 6.95 million yen plus 962,500 yen
9 to 18 million yen	33% of taxable income exceeding 9 million yen plus 1,434,000 yen
more than 18 million yen	40% of taxable income exceeding 18 million yen plus 4,404,000 yen

Prefectural Income Tax Rates
Taxable Income	Tax Rate
all	4% of taxable income

Municipal Income Tax Rates
Taxable Income	Tax Rate
all	6% of taxable income

Prefectural Enterprise Tax Rates (in case of self-employed persons)
Taxable Income	Tax Rate
all	3% to 5% depending on the type of business