I was wondering if anyone out there can give me some advice, or point me in the direction of a reliable information source, regarding tax and insurance in Japan.

Until now, when working in Japan my income tax has always been sorted out by my employer. Also, as I have never stayed there for a full year, I think I have escaped from having to pay certain other taxes. My health insurance has also been sorted out either by my employer or university.

As of next week, I’ll be pretty much self-employed.

I don’t want to find myself in the position where a year down the line I am suddenly faced with a large tax bill, so my question to people living in Japan is, does anyone know what I have to pay and how I go about paying it? Is there just income tax, or do they also have what we call Council Tax (charged to households, as opposed to , to pay for local services). Would I be eligible for the Japanese state pension if I payed contributions towards that, or would I be better off sorting out my own? Does anyone know of any specialist support centres / helplines that I could contact that give advice on all of the above?

Also, can anyone recommend a reputable life insurance company?

Finally, does anyone know how one goes about creating one’s Last Will and Testament in Japan, or what the default rules are if one dies without one?

Any advice would be gratefully received. Thanks 🙂

14 Responses

  1. I can’t advise you about life insurance or wills, but I’m guessing that Twinkle can look into that as such things are not specific to foreigners or the experience of being “new” to Japan. Also, as your beneficiary, she’ll need to be involved in the process anyway.

    As for the tax situation (and health insurance), you won’t get a big tax bill at the end of the year because the city government can’t calculate your taxes until they have a year of wages to base them on, so they’re always a year behind and they send you monthly payment booklets. They don’t make you cover the year you’re lagging behind on unless you move to a different ku (or out of the city). Then, you have to settle up for the year you’re behind (but when you move to the next place, the process starts all over again and you’re not paying anything the first year in your new area).

    As a very rough rule of thumb, ku taxes are about 5-7% of your income and health insurance is about 10-13% depending on your age and your income. (Mine are 12%) There is a cap on health insurance of about 520,000 yen per year so it’ll never exceed that even if you have a freakishly huge income. So, I recommend you save 20% of your income to be safe in the coming year or in case you move.

    Income taxes are deducted by the company you work for. Depending on the company, they will either massively over pay or pay about the right amount in most cases.

    Anyway, I can discuss this with you in much greater detail when you get here as we can talk on the phone or by Skype or whatever and I can tell you about our experiences if you don’t get your answers from someone or somewhere else.

    I wouldn’t fret much about it. If you fall behind, you can just take awhile to catch up since the government doesn’t get pushy for awhile.

  2. You’re MARRIED to an expert in all things Japanese … ask her, for goodness sake !

    If she doesn’t know, she’ll know a man who does !!

  3. Thanks both for your comments. I will of course ask *Twinkle* when I get there, I was just concerned that things might be different for us foreigners.

    Orchid64: thank you, invaluable advice, really appreciate that, just the kind of info I was after.

    It would be good to see you both when I get back. I don’t know my schedule yet, but I’m thinking that I will probably have more free time in the first couple of weeks before I start work, after that I foresee 6 months of long hours working to pay off our debts!

    I’ll email when I know what’s going on!

  4. I feel obliged to speak in your defense regarding granny’s comment.

    The circumstances for foreigners working and living in Japan is quite different from that for Japanese folks since we work under different contacts and enter the country under different circumstances. For instance, part-time workers, contract workers, freelance workers, etc. are charged 10% income tax if they are foreigners and they have to claim to get the difference back. Japanese freelance workers don’t necessarily work under those conditions (they may pay nothing at all and be responsible for paying it all). Also, the year of delay situation is a little different because the Japanese people were born here.

    I’ve found that most Japanese folks have no idea how it works for us because most of them don’t have to do anything (the company’s they work for handle everything). In fact, I taught a banker just last month who emphatically confirmed this. He said most Japanese people are utterly removed from their tax-paying as it’s all taken care of for them whereas we are pretty much in the thick of it.

    Foreign people get a lot of guff if they don’t pay taxes and insurance fees, but the truth is that a lot of Japanese people don’t actively pay them either. We not only have to make certain efforts to organize and work it all out, but we don’t have Japanese people around us who can easily relate to our responsibilities and offer advice.

    And I know this is going to sound weird, but being Japanese doesn’t make you an expert in all things Japanese. In fact, a lot of foreigners, because they seek to understand everything, know more about a lot of things than some Japanese folks (like what their holidays celebrate, how their government works, etc.). This isn’t a criticism, but I’ve lived here a long time and the questions I ask about Japanese culture and life can’t always be answered by the Japanese people around me. They just don’t care (or need to care) about the things that we care about. I don’t see a problem with that, but it does mean you have to find your answers elsewhere in many cases.

  5. Thanks Orchid64,

    Whilst I know the situation is as you describe it (and indeed that’s why I posted the entry in the first place) I think granny’s comment is totally understandable.

    I mean, if someone came to the UK and was to ask me about paying taxes or national insurance (what the threshold is, how they pay etc) I would feel fairly confident in providing them with the answers. It’s not that I’m an expert in this area – it’s just ‘common knowledge’ (even though it’s taken at source / sorted out by the employer as in Japan).

    The ‘knowing stuff about Japan’ is interesting too, and I can recognise it turned on its head with my Japanese friends here in the UK, many of whom know a lot more about our geography / history / politics than I do.

    It’s like living in a tourist town for twenty years – you never bother to go and see the attractions on your doorstep, they’re just ‘there’.

  6. Anon,

    wow. Thank you SOOO MUCH, really appreciate that, that was so kind of you to gather all of this information together, it will be invaluable.

    Thank you thank you thank you.

  7. Most of the information given to you by Anonymous is true, but all the ways in which things work don’t apply necessarily to you. Any company which doesn’t want to be listed on the stock exchange will not comply if they don’t want to and, depending on your contract, you will have zero power to force them to do so.

    T. works over 40 hours a week, but his contract is for only 25 hours. He does not get his health insurance paid in part by the company and if he insisted on having them do it, they’d just cut his hours and he wouldn’t make enough money. Foreigners are frequently given “fictional” contracts to cover the company in the even of any sort of dispute regarding benefits they might get.

    It’s all well and good to talk about what the Japanese get by law, but we don’t those benefits (nor do many other “temporary” and “part-time” workers who are Japanese). Unless you’re a part of a union (and Nova was the only school with a union), you are pretty much screwed.

    I just want to caution you because you mentioned work for Gaba at one point and they will not cover you as outlined in that piece no matter how many hours you work and if you complain, you’ll find yourself not getting enough work to pay the bills.

    Finally, at least this one statement, is untrue:

    “If you stay in Japan without paying into any insurance system, and then try to register with the kokumin kenkou hoken, you will have to pay retroactive from the moment you entered the country. It is illegal to be a resident of Japan without having some kind of health insurance and a pension.”

    I don’t know where it came from, but I didn’t register for my first two years in Japan. When I finally did register, I didn’t have to pay retroactively. If it is a rule written down somewhere, it is not enforced.

  8. Thanks for that Orchid64.

    It’s good to hear how it is on paper, and how it is in real life too.

    GABA are quite explicit in stating that they won’t pay anything for you (in terms of tax etc), that you’re not actually classed as an ’employee’ at all, rather, you’re a self-employed teacher being contracted out to them on a lesson-by-lesson basis.

    I appreciate them offering me a contract, but at the same time I feel that it is pretty exploitative.

    I’m also aware that their staff may read this blog.

  9. Brian – thanks for the comment, really useful!

    Unfortunatly the link to the book was so long that is stuffed up teh page formatting so I can’t publish your post, but I have it as an email and will use that – thanks again!!

  10. No problem with you posting that, Anonymous – I was putting the information out there for everyone.

    As for Orchid’s comments on:

    “If you stay in Japan without paying into any insurance system, and then try to register with the kokumin kenkou hoken, you will have to pay retroactive from the moment you entered the country. It is illegal to be a resident of Japan without having some kind of health insurance and a pension.”

    I’ll grant you it may not be enforced or the various offices just never bother to catch up with the paperwork, but it is a matter of law; if you’re caught, don’t expect to be able to get out of the retroactive coverage fees if you still want to be insured,

  11. hi,
    i do also have some doubts in this Kokumin Kenkou Hoken.
    i did went to japan hold a student past in 2006 march.Been in Japan osaka for a duration of 2 years.
    When i first arrive in japan ,i did went to sign-up for my aliean car & Kokumin Kenkou Hoken.
    But i did not pay even once for my monthly Kokumin Kenkou Hoken Fee.As i had a change in my address thus did not receive any infomation on the billing fee for Kokumin Kenkou Hoken.
    i had since return back to my home country but i would still want to go back for short holiday trip in japan.
    Am i consider currently status being banned from visiting japan??
    Due to i did not pay my Kokumin Kenkou Hoken fee during my stay in japan/.
    And may i ask if Kokumin Kenkou Hoken had expired since i do not receive a new card that was suppose to change every 6 months/
    i need HELP~thanks

  12. Anonymous, I very much doubt that you would be banned from entering Japan sue to not paying health insurance. I would just contact the town hall you registered at when you get back

  13. Is there a cap on the Average standard remuneration (monthly salary bracket)? I was told it was 620,000 per month.