My accountant visited my office today and finished taxes for last year. Japan seems to have a rather complicated system as to when you have to pay what and to whom:
There are corporate taxes to be paid to three different tax offices: the national, the prefectural, and the city tax office. The paperwork has to be filed one month after the end of the company’s fiscal year, and the money must be paid within 3 months of the end of the fiscal year, which in my case makes the latter date some time in May.
Then there is social security – health insurance and pension – for which you have to file the paperwork on 31st of July. Labour insurance is separate from this and has to be filed by the 10th of July. As I don’t have employees, I can choose whether I pay this myself or via the company; paying it myself means that this is cheaper for the time being, so I’ll keep doing this as long as possible.
And then there is personal or employee income tax which we have just finished to calculate. Just like everywhere else, there is an employer’s share and an employee’s share. Usually, the employer withholds both parts each month and the employee only gets the net amount and does not have to worry about anything. And usually, the employer pays those taxes to the tax office each month.
But, Japan is different! What is happening is that my company withholds the employer’s tax contribution each month from the salary of my employee – myself. The company now collects all those taxes and is only required to pay it to the tax office twice a year – on January 20th and July 10th. And the employee has to pay their share individually once a year, and again, there is the national tax due in February and the prefectural and city tax due in June.
Are you confused now? Me too! I’m very happy my accountant has it all under control. And I am even more happy about the results concerning the employer’s contribution for last year, since I only have to pay some 2000 YEN employer’s contribution, and some 4000 YEN employee’s contribution. Now, talk about cheap!