Foreign people who are working and living in Japan are obliged to pay the followings:
●所得税 income tax
●市民税 municipal tax
●年金 pension
Under the sway of the COVID pandemic, many people lost their jobs and suffer severe income reduction. However, they still have to pay a lot for taxes. In this blog, I would like to share with you how you can request for municipal tax reduction/exemption.
What are the differences between municipal tax and income tax?
Municipal tax belongs to “local tax” since it is paid to local governments such as prefectures and municipalities at municipal offices, meanwhile “Income tax” is considered as “national tax” since the payment is collected by the tax offices.
They are calculated separately and collected in different periods. Income tax is withheld from the amount estimated from the income at that time, and is settled by year-end adjustment and final tax return.
On the other hand, for municipal tax and metropolitan tax, based on materials related to the previous year’s income such as salary payment reports submitted by the employer to the city, ward office, town and village office, final tax returns submitted to the tax office, municipal tax and metropolitan tax declarations are mandatory.
Based on this, the municipality calculates the tax and notifies the employer or individual of the tax amount for one year, and the tax is levied. Therefore, the year of income and the year of payment will be different by one year.
Municipal tax calculation
Residence tax(prefectural tax+municipal tax) is calculated by dividing it into “income rate” and “per capita rate”. The income percent is calculated from the previous year’s income (income from January to December) and is similar to the income tax calculation method.
The per capita rate is the amount that is equally and uniformly charged to all people residing in the same prefecture. It is the cost of maintaining the city’s administrative services, regardless of the amount of income in the previous year.
It can also be used to secure the financial sources for disaster and crime prevention measures and public infrastructure refurbishment/rebuild. However, people who meet certain conditions, such as those who have no income and those who earn less than a certain amount, are exempt from residence tax.
Tax exempt
Resident tax is not levied on those who fall under any of the following (tax exempt).
◆ Those who receive living assistance under the Public Assistance Act
◆ Persons with disabilities, minors, widows, single parents who had a total income of 1.35 million yen or less in the previous year.
Example: Persons with disabilities who have annual salary income of less than 2,043,000 yen.
◆ Persons whose total income in the previous year is equal or less than [350,000 yen x (number of same livelihood spouse and dependent relatives + 1) + 100,000 yen + 210,000 yen]
(Note) For persons who do not have the same livelihood spouse or dependent relatives, total income amount is 450,000 yen or less.
Example: In case you have 75-year-old spouse and the “public pension income” is 2 million yen, your total income will be 2 million yen-1.1 million yen = 90 10,000 yen
(Note) 1.1 million yen is the “public pension deduction amount”
Then (350,000 yen x 2) + 100,000 yen + 210,000 yen = 1.01 million yen.
In conclusion, your total income amount is 900,000 yen which is less than 1.01 million yen is eligible for municipal tax exemption.
Those who do not need to pay “income percent” (only “per capita rate” is levied)
If the total income amount, etc. meets the following conditions, the “income percent” will not be applied and only the “per capita rate” will be imposed.
◆ Those who have the same livelihood spouse or dependents: If the total income amount of the previous year is equal or less than [350,000 yen x (number of same livelihood spouse and dependents + 1) + 100,000 yen + 320,000 yen]
◆ Those who do not have spouse and house mates: If the total income amount of the previous year is 450,000 yen or less
If you have been living in Japan for more than 2 years and have annual income over 1030 000yen, you are supposed to pay 市民税 (shiminzei). However, if you are student, unemployed, have a significant decrease in income or have dependent people in your home country (which means you send money to your parents, children every month), you can apply for 市民税 reduction.
For example, in Nagoya shi, if your income this year is 1/2 last year, you can apply for 市民税減免 (shiminzeigenmen). You can search on Google with the keywords “Your city + 市民税減免” for the detailed criteria.
To apply for 市民税減免, you have to go to 区役所-kuyakusho (ward office) or 市役所(Shiyskusho-city office) , then go straight to 保険・福祉窓口 or you can ask the front staff. 市民税 can be reduced at most 80%. In my friend’s case, she lost her job becuase of COVID and got 50% reduction.
Tax reduction 市民税減免
Required documents to bring if you are currently unemployed
1/求職活動中証明書: proof that you are trying to seek for a job. (ex: job application form, job contract, if you use job-seeking mobile apps like マイナビ, リクナビ…, take screenshot or copy the invitation letter for interview or do whatever to show that you are making an attempt to find a job)
2/退職届 たいしょくとどけ:resignation notification, you should contact your previous company to ask for this. For those who are currently unemployed, you can get tax reduction immediately. For those who are still working but have a significant decrease in income, bring your salary verification 給与明細書 (きゅうよめいさいしょ) for the last 3 months, you can get reduction but it takes a bit longer and you still have to pay 市民税 for this year. If they confirmed that your income actually decreases, you can get part of your tax back next year or reduction for next year.
Those who have dependent people.
Required documents:
●源泉徴収票 gensenchoushuuhyou: tax-income certificate (you fill the application form based on this)
●戸籍謄本 kosekitouhon: Official copy of family register (one in Japanese-you can translate yourself, one in your language)
●Money Transfer bill (ask the transfer company)
●Copy of resident card (both sides)
●Copy of my number card
●Application form (see how to write here, page 7)
After filling the form, take it to local taxation office 所轄税務署shokatsuzeimusho. If you have smartphone that can read my number card/IC card, you can write the application form online via e-Tax. In case you do not have such smartphones, if you register at the tax office in advance, you can use e-Tax.
【Reference】
https://www.city.higashimurayama.tokyo.jp/smph/kurashi/zei/zeikin/jumin/sizei_keisan.html
https://www.city.tachikawa.lg.jp/kazei/faq/kurashi/zekin/005.html
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