Japan Payroll News

Decrease of the Health insurance tax on salaries from March 2017

Japan Health Insurance Association announced that the Health insurance tax rate will decrease from March 2017. Each prefecture has a difference tax rate.

For example, in Tokyo, the current rate is 9.96%, which will decrease to 9.91 %.

A 50% / 50% Health insurance contribution is made between the company and the employee. As such, both company and employee will pay 4.955% (e.g. rates for Tokyo) of the total of the employee’s monthly salary and commuting cost with a cap.

Please note that this tax rate decrease will appear in April payroll onward since there is one month delay between the tax due and actual deduction from salary.

For bonuses, the new rate will be applied on the March bonus calculation.

For more details, please consult our Social Insurance page

Rise of the Nursing insurance on salaries from March 2017

Japan Health Insurance Association announced that the rate of nursing insurance will increase from March 2017. It will change from 1.58% to 1.65%.

Nursing insurance is calculated by: Standard Monthly Salary (and Bonus) X Insurance rate

The first payroll calculation with this new rate will appear in April payroll. However, on the bonus, the new rate should be applied to March bonus calculation.

Please note that nursing insurance is paid only by people from 40 to 64 years old.

Increase of the Children Upbringing taxes on salaries from May 2016

Japan Pension Service has announced the increase in the Children Upbringing taxes from May 2016. The rate has increased from 0.15% to 0.2%. The new rate will apply from the May payroll and April bonus.

Children Upbringing taxes are paid 100% by the company.

Decrease of the Health insurance tax on salaries from March 2016

Japan Health Insurance Association announced that the Health insurance tax rate will increase from March 2016. Each prefecture has a difference tax rate.

For example, in Tokyo, the current rate is 9.97%, which will decrease to 9.96 %.

A 50% / 50% Health insurance contribution is made between the company and the employee. As such, both company and employee will pay 4.98% (e.g. rates for Tokyo) of the total of the employee’s monthly salary and commuting cost with a cap.

Please note that this tax rate decrease will appear in April payroll onward since there is one month delay between the tax due and actual deduction from salary.

For bonuses, the new rate will be applied on the March bonus calculation.

For more details, please consult our Social Insurance page

Rise of the Pension payroll taxes on salaries from September 2014

From September 2014, the pension tax rate on salaries will increase. The current Tokyo rate is 17.120% which will increase to 17.474%.

The total Japan Pension payroll tax is paid 50%/50%  between company and employee. As such, company and employee both pay 8.737% each from the  monthly salary plus commuting costs refunded to employee.

The pension payroll taxes will gradually increase by 0.354% every year until September 2017 to the target rate 18.300% set by the government.

Please note that this payroll tax raise will appear on October payroll since there is a one month lag between the payroll tax due and the  date when it is actually deducted from salary.

For more details on payroll calculation see our payroll website: http://www.japan-payroll.com

Resident tax change on June 2014 payroll

As every year, the resident tax deduction will be adjusted on the June payroll.  The resident tax deducted from June is based on the taxable income of the previous year. Resident tax is roughly equal to 10% of the previous year taxable income. The resident tax amounts to be paid are calculated by the local tax office and payments slips are sent to the headoffice of the company. The resident tax for the year 2013 will be deducted from salary every month from June 2014 to May 2015 for employees who wish the resident tax to be deducted from their monthly salary.

Rise of the Nursing insurance on salaries from April 2014

Japan Health Insurance Association announced that the rate of nursing insurance will increase from March 2014. It will change from 1.55% to 1.72%.

Nursing insurance is calculated by: Standard Monthly Salary (and Bonus) X Insurance rate


The first payroll calculation with this new rate will be April. However, on the bonus, the new rate should be applied to it whose payment day should be from March 1st 2014.

Please note that nursing insurance is paid only by people from 40 to 64 years old.

 

Rise of the Pension payroll taxes on salaries from September 2013

From September 2013, the pension tax rate on salaries will increase. The current Tokyo rate is 16.766% which will increase to 17.120%.

The total Japan Pension payroll tax is paid 50%/50%  between company and employee. As such, company and employee both pay 8.56% each from the  monthly salary plus commuting costs refunded to employee.

The pension payroll taxes will gradually increase by 0.354% every year until September 2017 to the target rate 18.300% set by the government.

Please note that this payroll tax raise will appear on October payroll since there is a one month lag between the payroll tax due and the  date when it is actually deducted from salary.

For more details on payroll calculation see our payroll website: http://www.japan-payroll.com

 

Increase of the withholding tax rate from Jan 1st 2013

From January 1st 2013 to December 31st 2037, the withholding tax rates will be raised by 2.1%.
This surtax is part of the measures to finance the reconstruction after the Great East Japan earthquake that happened in March 2011.

For example, the new rate for the 10% withholding tax up to 1 Million JPY payment will be 10.21, for 20% withholding tax for payments over 1 Million JPY, the tax rate will become 20.42%.

Withholding taxes on salaries will also raise based on the table published by the National Tax Agency.

Rise of the Pension payroll taxes on salaries from September 2012

From September 2012, the pension tax rate on salaries will increase. The current Tokyo rate is 16.412% which will increase to 16.766%.

The total Japan Pension payroll tax is paid 50%/50%  between company and employee. As such, company and employee both pay 8.383% each from the  monthly salary plus commuting costs refunded to employee.

The pension payroll taxes will gradually increase by 0.354% every year until September 2017 to the target rate 18.300% set by the government.

Please note that this payroll tax raise will appear on October payroll since there is a one month lag between the payroll tax due and the  date when it is actually deducted from salary.

Resident tax adjustment on June payroll

As every year, the resident tax deduction will be adjusted on the June payroll.  The resident tax deducted from June is based on the taxable income of the previous year. Resident tax is roughly equal to 10% of the previous year taxable income. The resident tax for the year 2011 will be deducted from salary every month from June 2012 to May 2013 for employees who wish the resident tax to be deducted from their monthly salary.

Increase in personal income tax for salaries over 15 MJPY from Jan 1st 2013

From January 1st 2013, the deduction authorized for professional expenses for employees with a net salary over 15 Million JPY will be capped to 2,45 Million JPY. Until now the deduction allowed for net salaries of 15 Million JPY and over was 1,7 Million JPY +5% of net salary.
This will result in an effective tax increase of the top marginal tax rate on salaries from 47.5% to 50%.

Increase of the Children Upbringing taxes from April 2012

Japan Pension Service has announced the increase in the Children Upbringing taxes from April 2012. The rate has increased from 0.13% to 0.15%. The new rate will apply from the May payroll and April bonus.

Children Upbringing taxes are paid 100% by the company.

Please consult our Social Insurance in Japan page for details of the Children Upbringing Tax.

Increase of the Health and Nursing insurance taxes on salaries from March 2012

Japan Health Insurance Association announced that the Health insurance tax rate will increase from March 2012. Each prefecture has a difference tax rate.

For example, in Tokyo, the current rate is 9.48%, which will increase to 9.97 %.

A 50% / 50% Health insurance contribution is made between the company and the employee. As such, both company and employee will pay 4.985% (e.g. rates for Tokyo) of the total of the employee’s monthly salary and commuting cost with a cap.

For employees aged 40 to 64, an additional Nursing insurance will apply. There will also be an increase in the nursing insurance from the current 1.51% to 1.55% (nationwide uniform rate) from March 2012. As with the Health insurance, a 50% / 50% split of the tax burden  between company and employee applies to the Nursing insurance. Therefore, for employees aged 40 to 64, the total Health insurance and Nursing insurance tax will increase from the current 10.99% to 11.52% (Tokyo rate).

Please note that this tax rate increase will appear in April payroll onward since there is one month delay between the tax due and actual deduction from salary.

For bonuses, the new rate will be applied on the March bonus calculation.

For more details, please consult our Social Insurance page

Year End Approaches: Paying bonus

As the year approaches, many companies think about paying bonus to employees. We recommend that companies pay bonus in January instead of December. The reason is that since companies must calculate employees tax liability during the year end withholding tax adjustment, ” nenmatsu chosei” in Japanese, late decision in attributing bonus can create issues for calculating the December payroll when tax liabilities must be calculated. A bonus paid in January can still be considered as a previous year tax deductible expense for foreign companies with a December year end.
Please also consult our payroll in Japan page

Disclaimer: This information is for illustration purpose only. JMC cannot be held liable for any decision made based on this information. For any advice regarding taxes in Japan, Licensed tax accountant should be consulted.