Filing Taxes in Japan is an excruciating experience. Not that the rules are that complicated, but it's amazing that the entire process, including the forms and instructions are completely in Japanese. Despite my affinity to numbers and sufficient accounting expertise, I have never found myself so confused, dazed and lost, in my life :)
Understandably so, since only 1.5% of the population (~2.03 million) is foreigners. And I am guessing 2/3rd of them are quite capable of reading and writing in Japanese (kanji and kana).
For the rest of us, it's quite a struggle. And I wish the tax office was a bit more considerate, especially when immigration is crucial for a country like Japan, where the workforce is shrinking.
The first time when you step into your local tax office, it's an alienating experience. There are no signs or instructions in English. Nice thing about Japan is, that people are really nice. The friendly staff escorted me to a tax consultant, Nozaki-san, an elderly gentleman, the only person in the entire office, who could speak English. It took us 10-15 mins to establish the baseline expectation of our communication abilities, and another 30-40 to review and complete my forms. Then he filled up my payment slip and guided me to the cashier to pay my taxes. I am glad Japan uses the same number system!
Anyways, meanwhile, here are some tips based on this experience:
1. In most cases, if you are working in a company, your income tax is already with-held, every month. Check your payslip to know what I mean. You only need to pay taxes on your additional income - Vested Stocks, Options, Capital Gains, and any other local income. However, you do need to file everything including your salary income
2. Unless you have a tax accountant, the tax office is your best bet. Don't leave it till the end, since it gets really crowded closer to the deadline. Go early on a weekday to your prefecture's tax office. They generally have an english speaking consultant who can help you fill up the form
3. Before you head to the tax office, do your homework.
-Pick up the Withholding tax slip from your workplace. You'll generally find it in your payslip system. If not, ask your payroll. It has most of the information you need, to file your taxes.
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| Tax witholding slip - English translated at gaijintax.com |
-Also keep all the documents of any additional income source you want to declare
- Vested Stocks, options and exercises are really tricky!
Consult your co-workers. They'll guide you through the process. Key thing is you need foreign exchanges rates TTM/TTB/TTS for JPY vs the gain currency for that specific date. You can get the information from Bank of Japan or MUFJ website. If possible, run your numbers on your spreadsheet before going to the tax office. They only have calculators, and it's quite a painful exercise to do, on the spot. The calculation methodology is below
- Print these english translated copies from Gaijintax.com. They are extremely useful.
- Also, get details on your international taxes, to avoid double taxation, if part of your income is also being taxed in other countries. You can get some tax credits
4. Try to fill up the form online, since it saves a lot of time. You can then print it out and bring it along to the tax office. The step by step instructions on where to click, and how to proceed is below. It's from the nice folks at Baker & McKenzie, who gave a seminar at my workplace last year.
Trust me, it saves a lot of time.
5. Be Patient and be nice to the folks in the tax office. They are trying their best
In the end, it was an incredible experience. It taught me how reliant I am on English, and how handicapped I felt due to my limited language skills. Also made me ponder on how the entire system could be made more efficient if there were more instructions. I was shocked to see the long queue, of both Foreigners and Japanese locals, in the tax office, requesting assistance. There are not a lot of deductions in Japan, like in other countries. I can definitely see an area where I could really contribute. So if you are interested in starting a tax consulting business, ping me :)
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