Updated on: 2025/08/07 09:56 (UTC)
Overview
Japan, a country consisting of numerous islands in eastern Asia, is primarily governed by a constitutional monarchy with administrative functions delegated among 47 prefectures. The capital city of Japan is Tokyo. Among the almost 7,000 islands that are part of Japan are four that are far larger and more populous than the others. The four such islands are Hokkaido, which is the northernmost among the four; Honshu, which is to the immediate south of Hokkaido and not only is the largest island of Japan, but contains Japan’s capital city of Tokyo; Shikoku, which in relation to some of the prefectures on Honshu is to the south of Okayama Prefecture and to the west of Wakayama Prefecture; and Kyushu, which is to the southwest of Honshu and Shikoku. The most prominent archipelago of Japan other than the country’s main four islands is the Ryukyu Islands (Nansei Islands), which span from relatively close to the southern coast of Kyushu to relatively close to the eastern coast of Taiwan. The largest and most populous island of the Ryukyu Islands is Okinawa Island.
Most of Japan’s prefectures are based on Honshu. The 34 prefectures on Honshu are Aichi, Akita, Aomori, Chiba, Fukui, Fukushima, Gifu, Gunma, Hiroshima, Hyogo, Ibaraki, Ishikawa, Iwate, Kanagawa, Kyoto, Mie, Miyagi, Nagano, Nara, Niigata (Nigata), Okayama, Osaka, Saitama, Shiga, Shimane, Shizuoka, Tochigi, Tokyo, Tottori, Toyama, Wakayama, Yamagata, Yamaguchi, and Yamanashi. The seven prefectures on Kyushu are Fukuoka, Kagoshima, Kumamoto, Miyazaki, Nagasaki, Oita, and Saga. The four prefectures on Shikoku are Ehime, Kagawa, Kochi, and Tokushima. Hokkaido Prefecture is the sole prefecture on Hokkaido. Within the Ryukyu Islands, all of the islands to the northeast of Okinawa Island are part of Kagoshima Prefecture and Okinawa Island and the remainder of the Ryukyu Islands comprise Okinawa Prefecture.
The primary written and spoken language used in Japan is the Japanese language, which in Japan is known as Nihongo. Japan does not have a legally defined official language, but Japanese often is referred to as the national language. The English language is commonly used in Japan and correspondence with international businesses often is conducted in English. Government departments often publish documents in English. The writing system for the Japanese language consists of two intertwined systems: a logographic writing system with characters known as Kanji and a syllabic writing system with characters known as Kana, with Kana characters subdivided into Hiragana characters and Katakana characters. There are two directionalities that are currently used for written Japanese text, and a document written with one of these directionalities typically does not also include text written with the other directionality. The directionality more commonly used in Japanese governmental documents, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom. This directionality is known in Japan as yokogaki and as yokogumi. The other directionality is progression along vertical lines from top to bottom, with successive vertical lines read from right to left. This directionality is known in Japan as tategaki and as tategumi. In the Japanese language, Japan is known as Nippon.
Japan’s currency is the Japanese yen.
Employers in Japan are responsible for withholding income taxes and social security contributions from employee compensation. Contributions to the social security system also are required by employers. Workers in Japan are subject to national income taxes and local resident taxes.
Employers must follow minimum standards concerning wages, working hours and leave, governed by the Minimum Wages Act, the Labour Standards Act, and the Industrial Safety and Health Act. Additional labor laws address working conditions and discriminatory employment packages.
Japan also has a mandated pension system and employers are responsible for withholding and contributing to the Employees’ Pension Insurance program.
The Immigration Control Act governs which foreign nationals may reside in Japan and obtain a work permit. Foreign workers with work permits are covered by the labor laws (including the minimum wage law) and must pay taxes.
Japanese residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.
News articles regarding payroll in Japan are available in
CURRENCY DETAILS
The currency of Japan is the Japanese yen (¥), also known simply as the yen. The internationally recognized three-letter currency code for the yen is JPY, which also is one of the currency symbols for the yen. The plural form of yen is the same as its singular form.
When an amount of yen is written using the currency symbol ¥, which in international contexts is the predominant symbol used for the currency, the symbol precedes the numerical value with no space between the numerical value and symbol. When an amount of yen is written using the currency symbol 円, which is the predominant currency symbol used in Japan to denote amounts of yen, the symbol follows the numerical value with no space between the numerical value and symbol.
When an amount of yen is written using the currency symbol JPY or the variant JP¥, the symbol either precedes or follows the numerical value with a space between the numerical value and symbol.
One hundredth ( 1 ⁄ 100 ) of one yen is referred to as a sen, which has the same plural form as its singular form, although transactions involving Japanese currency do not typically include amounts other than whole numbers of yen.
Additionally, when amounts of yen are written in Japanese and the currency symbol is used, amounts of at least 10,000 yen that have at least one nonzero integer among the ten-thousands place or a higher digit place sometimes are abbreviated so that the numbers in the ten-thousands place and higher digit places are rendered, but then collectively followed by the Kanji symbol for 10,000 (万) with no space between the number in the ten-thousands place and the symbol. The Kanji symbol for 10,000 is the same as the Chinese Hanzi symbol for 10,000. When there are no nonzero numbers in the thousands place or a lower digit place, no numbers are rendered to the right of the 万 symbol and the currency symbol 円 follows the 万 symbol with either a space or no space between these symbols. When there is a nonzero number in the thousands place or a lower digit place, the numbers among the thousands place and lower digit places would be rendered to the right of the 万 symbol with no space between the 万 symbol and number in the thousands place and with the currency symbol 円 following the number in the ones place (or in rare cases the nonzero number in the lowest digit place below the ones place that has a nonzero number), with no space between the ones place (or otherwise the right-most nonzero number below the ones place) and the currency symbol. When the 万 symbol is used for rendering amounts of yen, it is common for there to be no spaces and no punctuation marks between consecutive numbers, although a comma sometimes is placed between the number in the highest digits place and the number in the second-highest digits place. For example, the amount of 3.52 million yen may be rendered as 352万 円or as 352 万円. Also for example, the amount of 784,520 yen may be rendered as 78万4520円.
Digital Currencies: Japan legally recognizes bitcoin as a legal method of payment. Although bitcoin is legally recognized as a method of payment in Japan, the Japanese Financial Service Agency considers bitcoin to be an asset or commodity rather than a legal currency.
Digital currencies generally are subject to standard taxation models, including income tax and capital gains tax. Before June 30, 2017, a consumption tax applied to digital currencies.
The amount of taxable income on digital currency that is sold or converted to Japanese yen is calculated by the difference between the value at the time of payment and the acquisition price of the digital currency.
TAXES
Japan’s national income tax system is governed by the Income Tax Act. Employers are responsible for withholding income taxes and social taxes from each salary payment. Additionally, employers make a “year-end adjustment” for most employees, which eliminates the need for the employee to file tax return.
The national government of Japan enacts laws relating to income tax. Prefectural and municipal governments also have some power to levy taxes.
In November 2011, the Japan Diet passed a Special Reconstruction Income Tax to aid recovery after the Great East Japan Earthquake. For each year from 2013 to 2037, covered individuals need to declare and pay special income tax for reconstruction in conjunction with income tax. The special income tax for reconstruction is calculated by multiplying a tax rate of 2.1% by the base income tax for each year. Additionally, the local inhabitant tax will be increased by ¥1,000 (¥500 for municipal inhabitant tax and ¥500 for prefectural inhabitant tax) until 2023.
The tax year in Japan for individual taxpayers is from Jan. 1 to Dec. 31. For individuals tax returns and any payments owed are due by March 15.
Japan has a universal social security system which provides “social insurance” (health insurance and pension benefits) and “labor insurance” (employment insurance and workers’ accident insurance). Social taxes also are applied to fund various programs such as health insurance and nursing care insurance, pension benefits, and employment insurance.
A mandated pension system requires employee and employer contributions.
Japan sometimes refers to years of the name of the applicable Japanese era instead of the international standard Gregorian calendar year in its official documentation, especially its Japanese-language documentation. The start of a Japanese era is affixed to the start of the reign of an emperor of Japan, and the end of that Japanese era is affixed to the end of the reign of that emperor. Years of the era are identified with the name of the era, followed by a number signifying the year of the era. The first year of an era starts with the date that the emperor of that era began to reign, and each subsequent year of the era starts on Jan. 1 of the applicable Gregorian calendar year. The current Japanese era is the Reiwa era, which started May 1, 2019, upon the conclusion of the Heisei era on April 30, 2019, with the abdication of the previous emperor of Japan. As examples of the Japanese era calendar system, the period from Jan. 8, 1989, to Dec. 31, 1989, was Heisei 1, the period from Jan. 1, 1990, to Dec. 31, 1990, was Heisei 2, and the period from Jan. 1, 2017, to Dec. 31, 2017, was Heisei 29.
Effective for 2021, the equivalent Japanese era year is Reiwa 3. Effective for 2020, the equivalent Japanese era year was Reiwa 2.
Coronavirus (Covid-19) Guidance: Employers can apply to postpone national tax deposits to the National Tax Agency; deposits for local taxes; deposits for pension insurance contributions to the Ministry of Health, Labour, and Welfare; and deposits for labor insurance contributions, which are employment insurance and workers’ accident compensation insurance, to the Ministry of Health, Labour, and Welfare. Deposits that were originally due from Feb. 1, 2020, to Jan. 31, 2021, may be postponed by up to one year. Businesses must have experienced a decrease in income of at least 20% in any period of at least one month starting in February 2020 or later, compared to the same period of 2019, and must have difficulty making deposits in one lump sum. Employers can generally apply by June 30, 2020, for any retroactive postponements.
The annual period in which employers report and pay labor insurance contributions, which are employment insurance and workers’ accident compensation insurance, was expanded to June 1 to August 31, 2020, from June 1 to July 10.
Wages paid to employees who temporarily are working in Japan and are unable to leave Japan are not subject to withholding if the employer does not have an office in Japan.
Income tax must be withheld from the wages of employees who are residents of Japan and temporarily are working outside of Japan, even if the duration that the employee is to work outside of Japan is extended indefinitely.
For employees temporarily returning to Japan after working in a foreign country for over a year, if an employee still is paid by an employer located in a foreign country for work performed in Japan, the company is not liable for withholding income tax. However, the employee still may be liable to pay income tax if they do not qualify for a tax treaty exemption.
Nonresident employees generally retain a tax treaty exemption as long as three conditions are met: the total duration in Japan does not exceed 183 days in a year or 12 consecutive months; the employer is not a resident of the same country where the employee works, and the employee is not paid from a permanent office of the employer located in the same country where the employee works. The conditions may vary depending on the specific provisions of tax treaties.
Employer-provided telecommuting allowances, including the costs of communication, electricity and rental offices as well as equipment that has been lent to employees, are not subject to income tax, according to guidance released on Jan. 19, 2021, by the Japanese National Tax Agency.
Income Taxes
Japan’s income tax system combines a self-assessment system with a withholding system that requires withholding agents (payers of salaries and wages, retirement allowance, interest, dividends and fees) to withhold tax at the time of payment and remit it to the National Tax Agency (NTA).
Income tax on employment income is withheld according to tax tables that list a taxpayer’s income amount and personal deductions. Salaried employees are required to provide their employer with an Application for (Change in) Exemption for Dependents of Employment Income Earner at least one day prior to the date on which employment income is first paid each year. This form allows the employer to use the correct formula for withholding taxes and without it, the employer must use a higher tax rate for collecting the withholding tax.
Employers use tax tables for either periodic salary income or bonuses and other special payments to accurately calculate employees taxes. The year-end adjustment requires employers to determine the total amount of tax each employee owes for the year, adjust the final salary payment for over- or under-payment of taxes and ensure that all taxes are withheld in the final salary payment of the year. Additional forms needed for this process include “Application for Deduction for Insurance Premiums for Employment Income Earner,” “Application for Special Credit for Loans Relating to a Dwelling for Employment Income Earner,” and “Application for Special Exemption for Spouse of Employment Income Earner.” There are no joint tax returns in Japan; spouses without an income are dependents of the working spouse.
Salaries paid to the following persons are not subject to the year-end adjustment:
- Employees with salaries of ¥20 million or less;
- Nonresident employees, which are persons with neither domicile in Japan nor residence for one year or more in Japan;
- Employees who do not submit an Application for (Change in) Exemption for Dependents of Employment Income Earner; and
- Persons for whom collection has been suspended or who have received a tax refund under the provisions of the Act for Tax Reduction, Exemptions, and the Suspension of Collection for Disaster Victims.
For employees who leave the company before the year end (due to a transfer or death) the year-end adjustment is performed when the employment ends.
Local inhabitant taxes can be deducted from income or paid directly by employees.
Coverage: Under Japan’s withholding tax system, withholding agents who pay salary, interest, dividends, fees, pensions, and other types of remuneration, calculate the tax amounts at the time of making payment and pay the tax amounts deducted from the payments. Except for withholding income tax on interest, which is a first and final tax credit for the amount of withholding income tax is given to the taxpayer when the final tax return is filed.
Employees: For tax purposes, individuals living in Japan are classified as a permanent resident, nonpermanent resident, or nonresident. A permanent resident has either lived in Japan for at least five years or intends to live in Japan permanently. Permanent Residents pay taxes on their worldwide income. A nonpermanent resident is a person who has lived in Japan for less than five years but does not intend to live in Japan permanently. Nonpermanent residents pay taxes on all income except income from other countries that are not remitted to Japan. A nonresident has lived in Japan for less than a year and does not have a primary base of living in Japan. Nonresidents pay taxes on income from sources in Japan but not on income from other countries.
Rates and Thresholds: Income tax rates are levied on a progressive scale for residents, with rates ranging from 5% to 45%.
Japan’s personal income tax rates for residents and minimum and maximum amounts of annual income for each tax bracket are as follows:| Range of Annual Income (Japanese Yen) | Income Tax Rate |
|---|---|
| Up to ¥1.95 million | 5% |
| More than ¥1.95 million and up to ¥3.3 million | 10% |
| More than ¥3.3 million and up to ¥6.95 million | 20% |
| More than ¥6.95 million and up to ¥9 million | 23% |
| More than ¥9 million and up to ¥18 million | 33% |
| More than ¥18 million and up to ¥40 million | 40% |
| More than ¥40 million | 45% |
Effective from Jan. 1, 2013, to Dec. 31, 2037, individuals also are assessed a special income tax for reconstruction, which was implemented to raise funds to repair infrastructure damaged by natural disasters and to enhance the country’s infrastructure for proactive emergency management. The rate of the special income tax for reconstruction is 2.1% and is assessed on the total amount of income tax that otherwise would be assessed on an individual instead of being assessed on that individual’s income, i.e. the special income tax for reconstruction assessed on an individual is 0.021 multiplied by the individual’s total amount of income tax due when excluding from that total the special income tax for reconstruction.
The income tax rates for withholding from employment income, number of brackets, and ranges of income for each tax bracket differ from the aforementioned set of personal income tax brackets generally applicable to overall employment income. The amounts to withhold that are indicated in the Withholding Tax Amount Table for Employment Income are influenced by an employee’s amount of employment income as indicated in the ranges of income in the two leftmost vertical columns and the employee’s number of dependents, ranging from zero to seven or more, as indicated at the top of the table. Calculation of an employee’s amount of employment income for use with the tables is elaborated upon in this section of the primer’s Withholding Methods subsection. The special income tax for reconstruction is factored into the amounts to withhold from employment income as indicated in the tables.
Nonresident employees working in Japan are subject to a flat income tax withholding rate of 20.42%, which includes a base rate of 20% plus a special income tax for reconstruction component of 0.42% (The base rate of 20% multiplied by the special income tax for reconstruction rate of 2.1%, which is equivalent to 0.021, is 0.42).
Registration: Withholding agents must submit a “Notification on the Establishment of a Salary-paying Office” within one month of the date of occurrence of either:
- the establishment of a new office that handles salary payments (e.g., the establishment of a corporation or the opening of a branch or business office); or
- the commencement of salary payment handling activities by any branch, business office, or similar establishment.
Taxable Amounts: Taxable income includes:
- employment income (salaries, wages, bonuses, stock options, tax equalization and other allowances such as cost of living, housing, utility, foreign exchange, children’s tuition, and medical, received as compensation for services provided as an employee); some allowances (such as commuting expenses) are not taxed, but low-interest loans provided by an employer for an employee’s purchase of a home and other expenditures may be taxable as employment income;
- interest income, dividend income and capital gains; and
- retirement income and occasional income.
Amounts that are not considered taxable income include necessary business expenses for self-employed individuals; medical expenses, subject to certain limitations; social security contributions; life insurance premiums; charitable contributions, subject to certain limitations, and other personal deductions.
Withholding Methods: Employers must withhold tax from remuneration paid to an employee in Japan according to the applicable income tax withholding tables. The amount of employment income subject to income tax withholding is determined in four steps:
- 1) Amount of Earnings (including salary, lump-sum payments from life insurance policies) minus Deductions from Earnings (including deduction for insurance premiums, employment income deduction) = Amount of Income;
- 2) Amount of Income minus Deductions from Income (including basic exemption, exemption for spouse and dependents, exemption for the disabled, for widows/widowers and working students, deduction for social insurance premiums, life insurance premiums and earthquake insurance premiums, deduction for casualty losses, medical expenses, and donations) = Amount of Taxable Income;
- 3) Amount of Income Tax is calculated by multiplying the Amount of Taxable income by Appropriate Tax Rate; and
- 4) Balance of Tax Amount is calculated by subtracting Deductions from Tax including deduction for withholding tax, credits for dividends, digital certificates and foreign tax and special credits for loans relating to a dwelling, for contributions to political parties and public interest associations, for anti-earthquake improvements to existing houses, and for new building of certified long-life quality housing.
A Withholding Tax Guide for 2021 and a Withholding Tax Guide for 2020, general guides explaining Japan’s tax withholding system, were released by Japan’s National Tax Agency.
Returns and Remittance: Generally, employers must pay the withheld tax to the government by the 10th of the month following the payment. If the due date is a Saturday, Sunday, or holiday, the next business day shall be the due date. Employers with fewer than 10 employees can submit an “Application for Approval Made in Relation to the Special Provision for Due Dates for Withheld Income Tax” and make payments only twice a year: on July 10 (for income withheld between January and June) and on Jan. 10 the following year (for income withheld between July and December).
Employers must also submit a withholding tax report on the employment income subjected to withholding tax to the appropriate local governments where the employee resides as of Jan. 1 so that the employee’s inhabitant tax can be determined. Once the tax is determined by the local governments, employers deduct the necessary amount in 12 equal installments beginning in June of the current year and pay it to the municipalities.
Employers must prepare two copies of the “Employment Income Withholding Record” stating the amount of salary, the payment period and the amount of tax withheld. One copy must be submitted to the district director of the competent tax office by Jan. 31 following the end of the tax year (or in the case of an employee retiring, within 1 month of retirement) and the other copy must be issued to the employee.
Retirees must be issued a withholding record within one month after the day of the retirement.
Withheld income tax must be paid either at a tax office or a financial institution along with the “Statement of Collected Income Tax” or it can be submitted electronically using Japan’s e-Tax online portal.
Tax returns are due by March 15; extensions of the filing deadline are not available.
Recordkeeping: Generally, taxpayers must maintain books and records in case they are subject to inspection by tax authorities.
Taxpayers who are approved by the district director of the tax office may file a “blue return” which gives various privileges. The goal of this system is to promote proper bookkeeping of accounts and records.
The scope of entities/persons subject to maintenance of books and records in Japan has expanded in recent years. Maintenance of books and records, which was previously only required of individuals who file white returns and the total amount of business income, real estate income or forestry income exceeding ¥3 million in the prior fiscal year or in the year prior to the first preceding fiscal year, are now required for all entities/persons who conduct businesses generating such income (including those who are not liable to file income tax returns).
Employee Share Plans: Stock option plans offered to employees are taxable under Japan’s income tax at exercise and are subject to income tax withholding based on the difference in price between the price of the stock at grant and the price at exercise. Certain qualified stock options are only subject to capital gains at sale based on the difference in the grant price and the sale price of the options. Qualified stock options are only available for stocks in Japanese companies.
Penalties: If withholding payments are not made by the due date the withholding agent may in principle have to pay delinquent tax and additional tax for non-payment.
Effective since May 16, 2016, the delinquent tax rate is 14.6% per annum or a special standard rate plus 7.3%, whichever is lower.
Social TaxesJapan’s universal social security system includes social insurance (health insurance, nursing care insurance, and pension benefits) and labor insurance (employment insurance and workers’ accident insurance). A mandated pension system requires employee and employer contributions.
Social insurance contributions are administered by the Japan Pension Service, while labor insurance contributions are administered by the Ministry of Health, Labour, and Welfare.
The Japan Health Insurance Association, which is a government-backed health insurance organization, determines the health insurance and nursing care insurance contribution rates that generally are in effect and manages government-backed health insurance plans. The Japan Health Insurance Association also is known as Kyokai Kenpo.
Japanese nationals and foreign residents who registered with a local municipality are assigned a unique 12-digit individual number that is used for administrative procedures related to social security, taxation, and disaster responses. Employers are required to collect and manage tax identification numbers for employees, including part-time workers, to withhold taxes. However, employers are not allowed to use the numbers as employee identification numbers or to include the number on salary statements made to employees.
Coverage: Japan’s universal social security system covers everyone residing in Japan. Contributions based on employment income are assessed to fund pension insurance, health insurance, nursing care insurance, employment insurance, and workers’ accident compensation insurance.
Two programs provide health insurance: national health insurance and Employees’ Health Insurance (EHI). National health insurance covers all persons up to age 75 residing in Japan who are not covered under an employer. Employers do not contribute to national health insurance. The contribution is set by the insurer but must not exceed ¥630,000 a year per household. Contributions may be reduced for low-income persons.
EHI is either society-managed health care for members of an occupational health insurance society or association-managed health care for employees of firms with five or more employees; voluntary coverage for employees in private-sector workplaces with less than five workers and for agricultural, forestry or fishery workers; special systems for seamen, private-school employees and local and national government employees; and a health and medical services program operates for persons aged 75 or older.
Nursing care insurance provides old-age benefits for persons over 65 years. Employees aged between 40 and 64 years are required to pay the nursing care insurance premium.
All Japanese residents must be covered by the pension system, which provides covered individuals basic pension benefits, with some exceptions. The program is administered by the Japan Pension Service (JPS) and includes the mandatory Employees’ Pension Insurance (EPI). The EPI system applies to all employees in Japan under a contract of employment. Generally, all Japanese employees are enrolled into the Employees’ Pension Insurance system by their employers.
Employers regularly employing five or more workers must participate in the EPI system.
All Category II individuals, generally salaried workers in the private sector under age 70, are covered under the EPI system. Part-time workers also may be covered, depending on the facts and circumstances of the employment arrangement.
Employers are required to pay a child care benefits contribution, also known as a child allowance premium, along with the pension premium. This premium funds the government program that provides childcare allowance to residents with children.
The pension system year generally is from Sept. 1 to Aug. 31.
Employment insurance, which provides benefits for workers that become unemployed, is mandatory for employees under age 65; coverage is voluntary for employees in agricultural, forestry and fishery establishments with less than five regular employees and there are special systems for daily workers and seasonal workers. Workers who have less than 20 scheduled working hours per week and self-employed workers are excluded from coverage.
Workers’ accident compensation insurance covers illness, accident, disability, or death incurred by workers at work or while commuting to or from work.
Employment insurance and workers’ accident compensation insurance often are collectively called labor insurance. The labor insurance year generally is from April 1 to March 31.
Rates and Thresholds: Japan assesses contribution rates for health insurance, nursing care insurance, pensions, child care benefits, employment insurance, and workers’ accident compensation insurance.
Health Insurance: Health insurance contribution rates, also known as health insurance premium rates, vary among Japan’s 47 prefectures. Each employee is assessed half of the total monthly health insurance premium that is due based on the amount of employment income paid to the employee and the prefecture where the employee resides, and the employer is assessed the other half.
The total monthly health insurance premium that is due per employee is calculated by:
- multiplying the total health insurance premium rate for the prefecture where the employee resides by a standard monthly remuneration amount that is determined based on the employee’s applicable average monthly employment income when excluding long-term bonuses; and
- adding to that result, if a long-term bonus was paid to the employee during a particular month, the result of multiplying the total health insurance premium rate for the prefecture by a separate standard remuneration amount for each long-term bonus, also known as a standard bonus amount.
A long-term bonus for these calculations is a bonus that an employee received from an employer at an interval of more than three months since the immediately previous date when the employee received a bonus.
The maximum amount of monthly employment income, excluding long-term bonuses, paid to an employee upon which health insurance premiums may be assessed on the employee and employer is ¥1.39 million, which is the maximum standard monthly remuneration amount generally in effect for employment income.
There are 50 standard monthly remuneration amounts for employment income excluding long-term bonuses, with each of these standard monthly remuneration amounts associated with a range of average monthly employment income. An employee’s standard monthly remuneration amount is the one associated with the range that includes the applicable average monthly employment income, excluding long-term bonuses, actually paid to the employee.
An employee’s applicable average monthly employment income generally is the average monthly employment income that was paid to the employee during the employee’s base period. The base period is the span from April 1 to June 30 before the computation date of July 1, with an employee’s average monthly employment income, excluding long-term bonuses, determined by dividing the total employment income, excluding long-term bonuses, paid to the employee during the period by the applicable number of months when the employee worked during the period, which excludes months when the employee’s number of days of work plus days of paid leave was fewer than 17 days. The employee’s standard monthly remuneration amount as determined by the employee’s average monthly employment income for the base period immediately before the July 1 computation date is treated as the employee’s standard monthly remuneration amount in effect for the period after the July 1 computation date that spans from the first September after the computation date to August of the following year.
Employees who did not have a qualifying month of employment during the last base period that was completed before the employee became covered by the requirement to pay health insurance premiums, and who became covered by the requirement to pay health insurance premiums because they were paid an amount of employment income for a pay period, are assigned the standard monthly remuneration amount that is associated with the income range that includes their applicable average monthly employment income, which is equal to 30 times the amount of employment income they were paid for work during the pay period divided by the number of days in that pay period. The pay period from which coverage arises may be weekly, another defined period of less than monthly, or monthly.
The standard bonus amount based on a long-term bonus paid during a month is the amount of the bonus payment rounded down to the nearest multiple of ¥1,000. For health insurance contributions, if the total of the standard bonus amounts applicable to an employee based on long-term bonus payments to the employee during the period from April 1 to March 31 would exceed ¥5.73 million, the employee’s cumulative standard bonus amount for that period from April 1 to March 31 is treated as ¥5.73 million.
For calculations of health insurance premiums assessed on employees and employers, the standard monthly remuneration amounts for employment income, excluding long-term bonuses, and their associated ranges of average monthly employment income, excluding long-term bonuses, are as follows:| Remuneration Level | Standard Monthly Remuneration Amount (Japanese Yen) | Range of Applicable Average Monthly Employment Income (Japanese Yen) |
|---|---|---|
| Level 1 | ¥58,000 | Less than ¥63,000 |
| Level 2 | ¥68,000 | At least ¥63,000 but less than ¥73,000 |
| Level 3 | ¥78,000 | At least ¥73,000 but less than ¥83,000 |
| Level 4 | ¥88,000 | At least ¥83,000 but less than ¥93,000 |
| Level 5 | ¥98,000 | At least ¥93,000 but less than ¥101,000 |
| Level 6 | ¥104,000 | At least ¥101,000 but less than ¥107,000 |
| Level 7 | ¥110,000 | At least ¥107,000 but less than ¥114,000 |
| Level 8 | ¥118,000 | At least ¥114,000 but less than ¥122,000 |
| Level 9 | ¥126,000 | At least ¥122,000 but less than ¥130,000 |
| Level 10 | ¥134,000 | At least ¥130,000 but less than ¥138,000 |
| Level 11 | ¥142,000 | At least ¥138,000 but less than ¥146,000 |
| Level 12 | ¥150,000 | At least ¥146,000 but less than ¥155,000 |
| Level 13 | ¥160,000 | At least ¥155,000 but less than ¥165,000 |
| Level 14 | ¥170,000 | At least ¥165,000 but less than ¥175,000 |
| Level 15 | ¥180,000 | At least ¥175,000 but less than ¥185,000 |
| Level 16 | ¥190,000 | At least ¥185,000 but less than ¥195,000 |
| Level 17 | ¥200,000 | At least ¥195,000 but less than ¥210,000 |
| Level 18 | ¥220,000 | At least ¥210,000 but less than ¥230,000 |
| Level 19 | ¥240,000 | At least ¥230,000 but less than ¥250,000 |
| Level 20 | ¥260,000 | At least ¥250,000 but less than ¥270,000 |
| Level 21 | ¥280,000 | At least ¥270,000 but less than ¥290,000 |
| Level 22 | ¥300,000 | At least ¥290,000 but less than ¥310,000 |
| Level 23 | ¥320,000 | At least ¥310,000 but less than ¥330,000 |
| Level 24 | ¥340,000 | At least ¥330,000 but less than ¥350,000 |
| Level 25 | ¥360,000 | At least ¥350,000 but less than ¥370,000 |
| Level 26 | ¥380,000 | At least ¥370,000 but less than ¥395,000 |
| Level 27 | ¥410,000 | At least ¥395,000 but less than ¥425,000 |
| Level 28 | ¥440,000 | At least ¥425,000 but less than ¥455,000 |
| Level 29 | ¥470,000 | At least ¥455,000 but less than ¥485,000 |
| Level 30 | ¥500,000 | At least ¥485,000 but less than ¥515,000 |
| Level 31 | ¥530,000 | At least ¥515,000 but less than ¥545,000 |
| Level 32 | ¥560,000 | At least ¥545,000 but less than ¥575,000 |
| Level 33 | ¥590,000 | At least ¥575,000 but less than ¥605,000 |
| Level 34 | ¥620,000 | At least ¥605,000 but less than ¥635,000 |
| Level 35 | ¥650,000 | At least ¥635,000 but less than ¥665,000 |
| Level 36 | ¥680,000 | At least ¥665,000 but less than ¥695,000 |
| Level 37 | ¥710,000 | At least ¥695,000 but less than ¥730,000 |
| Level 38 | ¥750,000 | At least ¥730,000 but less than ¥770,000 |
| Level 39 | ¥790,000 | At least ¥770,000 but less than ¥810,000 |
| Level 40 | ¥830,000 | At least ¥810,000 but less than ¥855,000 |
| Level 41 | ¥880,000 | At least ¥855,000 but less than ¥905,000 |
| Level 42 | ¥930,000 | At least ¥905,000 but less than ¥955,000 |
| Level 43 | ¥980,000 | At least ¥955,000 but less than ¥1,005,000 |
| Level 44 | ¥1,030,000 | At least ¥1,005,000 but less than ¥1,055,000 |
| Level 45 | ¥1,090,000 | At least ¥1,055,000 but less than ¥1,115,000 |
| Level 46 | ¥1,150,000 | At least ¥1,115,000 but less than ¥1,175,000 |
| Level 47 | ¥1,210,000 | At least ¥1,175,000 but less than ¥1,235,000 |
| Level 48 | ¥1,270,000 | At least ¥1,235,000 but less than ¥1,295,000 |
| Level 49 | ¥1,330,000 | At least ¥1,295,000 but less than ¥1,355,000 |
| Level 50 | ¥1,390,000 | At least ¥1,355,000 |
The total health insurance premium rate for a prefecture, also known as the general insurance rate for a prefecture, is the sum of the common health insurance premium rate in effect for all of the prefectures, also known as the basic insurance rate, and a prefecture-specific health insurance premium rate, also known as a specified insurance rate.
Effective from March 1, 2021, to Feb. 28, 2022, the total health insurance premium rates range from 9.50% for the Prefecture of Niigata to 10.68% for the Prefecture of Saga. Effective from March 1, 2020, to Feb. 28, 2021, the total health insurance premium rates range from 9.58% for the Prefecture of Niigata to 10.73% for the Prefecture of Saga. Effective from March 1, 2019, to Feb. 29, 2020, the total health insurance premium rates ranged from 9.63% for the Prefecture of Niigata to 10.75% for the Prefecture of Saga.
Effective from March 1, 2021, to Feb. 28, 2022, the health insurance premium rates are as follows:| Prefecture | Total Health Insurance Premium Rate | Common Health Insurance Premium Rate for All Prefectures | Prefecture-Specific Health Insurance Premium Rate |
|---|---|---|---|
| Aichi | 9.91% | 3.53% | 6.38% |
| Akita | 10.16% | 3.53% | 6.63% |
| Aomori | 9.96% | 3.53% | 6.43% |
| Chiba | 9.79% | 3.53% | 6.26% |
| Ehime | 10.07% | 3.53% | 6.54% |
| Fukui | 9.98% | 3.53% | 6.45% |
| Fukuoka | 10.22% | 3.53% | 6.69% |
| Fukushima | 9.64% | 3.53% | 6.11% |
| Gifu | 9.83% | 3.53% | 6.30% |
| Gunma | 9.66% | 3.53% | 6.13% |
| Hiroshima | 10.04% | 3.53% | 6.51% |
| Hokkaido | 10.45% | 3.53% | 6.92% |
| Hyogo | 10.24% | 3.53% | 6.71% |
| Ibaraki | 9.74% | 3.53% | 6.21% |
| Ishikawa | 10.11% | 3.53% | 6.58% |
| Iwate | 9.74% | 3.53% | 6.21% |
| Kagawa | 10.28% | 3.53% | 6.75% |
| Kagoshima | 10.36% | 3.53% | 6.83% |
| Kanagawa | 9.99% | 3.53% | 6.46% |
| Kochi | 10.17% | 3.53% | 6.64% |
| Kumamoto | 10.29% | 3.53% | 6.76% |
| Kyoto | 10.06% | 3.53% | 6.53% |
| Mie | 9.81% | 3.53% | 6.28% |
| Miyagi | 10.01% | 3.53% | 6.48% |
| Miyazaki | 9.83% | 3.53% | 6.30% |
| Nagano | 9.71% | 3.53% | 6.18% |
| Nagasaki | 10.26% | 3.53% | 6.73% |
| Nara | 10% | 3.53% | 6.47% |
| Niigata | 9.50% | 3.53% | 5.97% |
| Oita | 10.30% | 3.53% | 6.77% |
| Okayama | 10.18% | 3.53% | 6.65% |
| Okinawa | 9.95% | 3.53% | 6.42% |
| Osaka | 10.29% | 3.53% | 6.76% |
| Saga | 10.68% | 3.53% | 7.15% |
| Saitama | 9.80% | 3.53% | 6.27% |
| Shiga | 9.78% | 3.53% | 6.25% |
| Shimane | 10.03% | 3.53% | 6.5% |
| Shizuoka | 9.72% | 3.53% | 6.19% |
| Tochigi | 9.87% | 3.53% | 6.34% |
| Tokushima | 10.29% | 3.53% | 6.76% |
| Tokyo | 9.84% | 3.53% | 6.31% |
| Tottori | 9.97% | 3.53% | 6.44% |
| Toyama | 9.59% | 3.53% | 6.06% |
| Wakayama | 10.11% | 3.53% | 6.58% |
| Yamagata | 10.03% | 3.53% | 6.50% |
| Yamaguchi | 10.22% | 3.53% | 6.69% |
| Yamanashi | 9.79% | 3.53% | 6.26% |
| Prefecture | Total Health Insurance Premium Rate | Common Health Insurance Premium Rate for All Prefectures | Prefecture-Specific Health Insurance Premium Rate |
|---|---|---|---|
| Aichi | 9.88% | 3.43% | 6.45% |
| Akita | 10.25% | 3.43% | 6.82% |
| Aomori | 9.88% | 3.43% | 6.45% |
| Chiba | 9.75% | 3.43% | 6.42% |
| Ehime | 10.07% | 3.43% | 6.64% |
| Fukui | 9.95% | 3.43% | 6.52% |
| Fukuoka | 10.32% | 3.43% | 6.89% |
| Fukushima | 9.71% | 3.43% | 6.28% |
| Gifu | 9.92% | 3.43% | 6.49% |
| Gunma | 9.77% | 3.43% | 6.34% |
| Hiroshima | 10.01% | 3.43% | 6.58% |
| Hokkaido | 10.41% | 3.43% | 6.98% |
| Hyogo | 10.14% | 3.43% | 6.71% |
| Ibaraki | 9.77% | 3.43% | 6.34% |
| Ishikawa | 10.01% | 3.43% | 6.58% |
| Iwate | 9.77% | 3.43% | 6.34% |
| Kagawa | 10.34% | 3.43% | 6.91% |
| Kagoshima | 10.25% | 3.43% | 6.82% |
| Kanagawa | 9.93% | 3.43% | 6.5% |
| Kochi | 10.30% | 3.43% | 6.87% |
| Kumamoto | 10.29% | 3.43% | 6.9% |
| Kyoto | 10.03% | 3.43% | 6.6% |
| Mie | 9.77% | 3.43% | 6.34% |
| Miyagi | 10.06% | 3.43% | 6.63% |
| Miyazaki | 9.91% | 3.43% | 6.48% |
| Nagano | 9.7% | 3.43% | 6.27% |
| Nagasaki | 10.22% | 3.43% | 6.79% |
| Nara | 10% | 3.43% | 6.71% |
| Niigata | 9.50% | 3.43% | 6.15% |
| Oita | 10.30% | 3.43% | 6.74% |
| Okayama | 10.18% | 3.43% | 6.74% |
| Okinawa | 9.95% | 3.43% | 6.54% |
| Osaka | 10.29% | 3.43% | 6.79% |
| Saga | 10.68% | 3.43% | 7.3% |
| Saitama | 9.80% | 3.43% | 6.38% |
| Shiga | 9.78% | 3.43% | 6.36% |
| Shimane | 10.03% | 3.43% | 6.72% |
| Shizuoka | 9.72% | 3.43% | 6.3% |
| Tochigi | 9.87% | 3.43% | 6.45% |
| Tokushima | 10.29% | 3.43% | 6.85% |
| Tokyo | 9.84% | 3.43% | 6.44% |
| Tottori | 9.97% | 3.43% | 6.56% |
| Toyama | 9.59% | 3.43% | 6.16% |
| Wakayama | 10.11% | 3.43% | 6.71% |
| Yamagata | 10.03% | 3.43% | 6.62% |
| Yamaguchi | 10.22% | 3.43% | 6.77% |
| Yamanashi | 9.79% | 3.43% | 6.38% |
| Prefecture | Total Health Insurance Premium Rate | Common Health Insurance Premium Rate for All Prefectures | Prefecture-Specific Health Insurance Premium Rate |
|---|---|---|---|
| Aichi | 9.9% | 3.51% | 6.39% |
| Akita | 10.14% | 3.51% | 6.63% |
| Aomori | 9.87% | 3.51% | 6.36% |
| Chiba | 9.81% | 3.51% | 6.3% |
| Ehime | 10.02% | 3.51% | 6.51% |
| Fukui | 9.88% | 3.51% | 6.37% |
| Fukuoka | 10.24% | 3.51% | 6.73% |
| Fukushima | 9.74% | 3.51% | 6.23% |
| Gifu | 9.86% | 3.51% | 6.35% |
| Gunma | 9.84% | 3.51% | 6.33% |
| Hiroshima | 10% | 3.51% | 6.49% |
| Hokkaido | 10.31% | 3.51% | 6.8% |
| Hyogo | 10.14% | 3.51% | 6.63% |
| Ibaraki | 9.84% | 3.51% | 6.33% |
| Ishikawa | 9.99% | 3.51% | 6.48% |
| Iwate | 9.8% | 3.51% | 6.29% |
| Kagawa | 10.31% | 3.51% | 6.8% |
| Kagoshima | 10.16% | 3.51% | 6.65% |
| Kanagawa | 9.91% | 3.51% | 6.4% |
| Kochi | 10.21% | 3.51% | 6.7% |
| Kumamoto | 10.18% | 3.51% | 6.67% |
| Kyoto | 10.03% | 3.51% | 6.52% |
| Mie | 9.9% | 3.51% | 6.39% |
| Miyagi | 10.1% | 3.51% | 6.59% |
| Miyazaki | 10.02% | 3.51% | 6.51% |
| Nagano | 9.69% | 3.51% | 6.18% |
| Nagasaki | 10.24% | 3.51% | 6.73% |
| Nara | 10.07% | 3.51% | 6.56% |
| Niigata | 9.63% | 3.51% | 6.12% |
| Oita | 10.21% | 3.51% | 6.7% |
| Okayama | 10.22% | 3.51% | 6.71% |
| Okinawa | 9.95% | 3.51% | 6.44% |
| Osaka | 10.19% | 3.51% | 6.68% |
| Saga | 10.75% | 3.51% | 7.24% |
| Saitama | 9.79% | 3.51% | 6.28% |
| Shiga | 9.87% | 3.51% | 6.36% |
| Shimane | 10.13% | 3.51% | 6.62% |
| Shizuoka | 9.75% | 3.51% | 6.24% |
| Tochigi | 9.92% | 3.51% | 6.41% |
| Tokushima | 10.3% | 3.51% | 6.79% |
| Tokyo | 9.9% | 3.51% | 6.39% |
| Tottori | 10% | 3.51% | 6.49% |
| Toyama | 9.71% | 3.51% | 6.2% |
| Wakayama | 10.15% | 3.51% | 6.64% |
| Yamagata | 10.03% | 3.51% | 6.52% |
| Yamaguchi | 10.21% | 3.51% | 6.7% |
| Yamanashi | 9.9% | 3.51% | 6.39% |
Nursing Care Insurance: Nursing care insurance premiums are paid by employees who are at least 40 years of age and up to 64 years of age.
The standard monthly remuneration amounts and standard bonus amounts applicable to an employee for calculating health insurance premiums also are used for calculating the employee’s nursing care insurance premiums.
Effective from March 1, 2021, to Feb. 28, 2022, the standard nursing care insurance premium rate for employees covered by National Health Insurance is 1.8%. Effective from March 1, 2020, to Feb. 28, 2021, the standard nursing care insurance premium rate for employees covered by National Health Insurance was 1.79%. Effective from March 1, 2019, to Feb. 29, 2020, the standard nursing care insurance premium rate for employees covered by National Health Insurance was 1.73%.
Pension Contributions: Effective starting Sept. 1, 2020, the maximum amount of regular monthly employment income paid to an employee upon which pension system contributions may be assessed on the employee and employer is ¥650,000. Effective until Aug. 31, 2020, the maximum amount of regular monthly employment income paid to an employee upon which pension system contributions may be assessed on the employee and employer is ¥620,000.
A separate maximum amount of taxable income is in effect for any long-term bonus, which for these calculations is a bonus that an employee received from an employer at an interval of more than three months since the immediately previous date when the employee received a bonus. The maximum taxable amount of a long-term bonus is known as the standard bonus amount. The standard bonus amount based on a long-term bonus paid during a month is the amount of the bonus payment rounded down to the nearest multiple of ¥1,000. The maximum amount of monthly employment income in the form of standard bonus amounts upon which pension system contributions may be assessed on the employee and employer is ¥1.5 million. For pension contributions, if the total of the standard bonus amounts applicable to an employee based on long-term bonus payments to the employee during a month would exceed ¥1.5 million, the employee’s cumulative standard bonus amount for that month is treated as ¥1.5 million.
Contributions under the employees’ pension insurance scheme are equally split between employees and employers.
Effective since Sept. 1, 2017, the total pension contribution rate is 18.3%, consisting of an employee rate of 9.15% and an employer rate of 9.15%. Effective from Sept. 1, 2016, to Aug. 31, 2017, the total pension contribution rate was 18.182%, consisting of an employee rate of 9.091% and an employer rate of 9.091%.
The total monthly pension insurance contribution that is due per employee is calculated by:
- multiplying the total pension insurance contribution rate by a standard monthly remuneration amount that is determined based on the employee’s applicable monthly employment income when excluding long-term bonuses; and
- adding to that result, if a long-term bonus was paid to the employee during a particular month, the result of multiplying the total pension insurance contribution rate by a separate standard bonus amount for each long-term bonus paid during the month.
Effective starting Sept. 1, 2020, for calculations of pension contributions assessed on employees and employers, the standard monthly remuneration amounts for employment income, excluding long-term bonuses, and their associated ranges of monthly employment income, excluding long-term bonuses, are as follows:
| Remuneration Level | Standard Monthly Remuneration Amount (Japanese Yen) | Range of Monthly Employment Income (Japanese Yen) |
|---|---|---|
| Level 1 | ¥88,000 | Less than ¥93,000 |
| Level 2 | ¥98,000 | At least ¥93,000 but less than ¥101,000 |
| Level 3 | ¥104,000 | At least ¥101,000 but less than ¥107,000 |
| Level 4 | ¥110,000 | At least ¥107,000 but less than ¥114,000 |
| Level 5 | ¥118,000 | At least ¥114,000 but less than ¥122,000 |
| Level 6 | ¥126,000 | At least ¥122,000 but less than ¥130,000 |
| Level 7 | ¥134,000 | At least ¥130,000 but less than ¥138,000 |
| Level 8 | ¥142,000 | At least ¥138,000 but less than ¥146,000 |
| Level 9 | ¥150,000 | At least ¥146,000 but less than ¥155,000 |
| Level 10 | ¥160,000 | At least ¥155,000 but less than ¥165,000 |
| Level 11 | ¥170,000 | At least ¥165,000 but less than ¥175,000 |
| Level 12 | ¥180,000 | At least ¥175,000 but less than ¥185,000 |
| Level 13 | ¥190,000 | At least ¥185,000 but less than ¥195,000 |
| Level 14 | ¥200,000 | At least ¥195,000 but less than ¥210,000 |
| Level 15 | ¥220,000 | At least ¥210,000 but less than ¥230,000 |
| Level 16 | ¥240,000 | At least ¥230,000 but less than ¥250,000 |
| Level 17 | ¥260,000 | At least ¥250,000 but less than ¥270,000 |
| Level 18 | ¥280,000 | At least ¥270,000 but less than ¥290,000 |
| Level 19 | ¥300,000 | At least ¥290,000 but less than ¥310,000 |
| Level 20 | ¥320,000 | At least ¥310,000 but less than ¥330,000 |
| Level 21 | ¥340,000 | At least ¥330,000 but less than ¥350,000 |
| Level 22 | ¥360,000 | At least ¥350,000 but less than ¥370,000 |
| Level 23 | ¥380,000 | At least ¥370,000 but less than ¥395,000 |
| Level 24 | ¥410,000 | At least ¥395,000 but less than ¥425,000 |
| Level 25 | ¥440,000 | At least ¥425,000 but less than ¥455,000 |
| Level 26 | ¥470,000 | At least ¥455,000 but less than ¥485,000 |
| Level 27 | ¥500,000 | At least ¥485,000 but less than ¥515,000 |
| Level 28 | ¥530,000 | At least ¥515,000 but less than ¥545,000 |
| Level 29 | ¥560,000 | At least ¥545,000 but less than ¥575,000 |
| Level 30 | ¥590,000 | At least ¥575,000 but less than ¥605,000 |
| Level 31 | ¥620,000 | At least ¥605,000 and up to ¥635,000 |
| Level 32 | ¥650,000 | At least ¥635,000 |
Effective until Sept. 1, 2020, the standard monthly remuneration amounts for employment income were the same as those in effect starting Sept. 1, 2020, except that there were only 31 levels instead of 32.
Child Care Benefits Contribution: The maximum amount of regular monthly employment income and the maximum monthly amount of employment income in the form of standard bonus amounts upon which child care benefits contributions may be assessed are the same as those applicable to pension insurance contributions.
Effective since April 1, 2020, the child care benefits contribution rate is 0.36%. Effective from April 1, 2019, to March 31, 2020, the child care benefits contribution rate was 0.34%.
Employment Insurance: Contributions to Employment Insurance are split by insured persons, the employer, and the government.
Effective from April 1, 2021, to March 31, 2022, unchanged from April 1, 2020, to March 31, 2021, contribution rates vary depending on the nature of business activities and are as follows:
- General business: 0.9% of employee monthly remuneration and bonus; the employer contributes 0.6%, while the employee contributes 0.3%.
- Agriculture, forestry, fishing, and sake manufacturing businesses: 1.1% of employee monthly remuneration and bonus; the employer contributes 0.7%, while the employee contributes 0.4%.
- Construction business: 1.2% of employee monthly remuneration and bonus; the employer contributes 0.8%, while the employee contributes 0.4%.
The 2021-22 Employment Insurance rates chart and the 2020-21 Employment Insurance rates chart were released by the Ministry of Health, Labour and Welfare.
Workers’ Accident Compensation Insurance: Employer contribution rates for workers’ accident compensation insurance range from 0.25% to 8.8%. Employees are not assessed contribution rates for this type of insurance.
Workers’ accident compensation insurance contribution rates vary among employers depending on the nature of their business.
The Workers’ Accident Insurance Rate Table in effect since April 1, 2018, and the Workers’ Accident Insurance Rate Table in effect from April 1, 2015, to March 31, 2018, were released by the Ministry of Health, Labour, and Welfare, and contain contribution rates for more than 50 industry categories.
The rates indicated in the rates tables are rendered as amounts that when divided by 1,000 result in the decimal equivalent of the applicable rate percentage. For example, if an industry’s rate indicated in a rates table is 5.5, that amount when divided by 1,000 results in the decimal 0.0055, which is the equivalent of 0.55%.
Employers also are required to pay an annual premium of 0.002%, known as the general contribution, to fund benefits for asbestos-induced diseases.
Registration: Within 10 days from the date of establishment, employers are required to notify the Ministry of Health, Labour, and Welfare of the date of establishment, the name and address of the business operator, the type of the business, and the place where the business is operated.
Employers must enroll in social insurance programs when first incorporating by submitting labor and social insurance notification forms to the relevant authorities. Employers can register for labor insurance at any time after the company is established and its first employee is hired. In the first year after the business is registered, estimated labor insurance premium payments must be made for four-month periods depending on when the business was registered.
- If the business was registered from April 1 to May 31, three payments must be made in the first year. A payment for the period from the date of registration to July 31 must be made within 50 days of the date of registration. Payment for the period from Aug. 1 to Nov. 30 is due Oct. 31, and payment for the period from Dec. 1 to March 31 is due Jan. 31.
- If the business was registered from June 1 to Sept. 30, two payments must be made in the first year. A payment for the period from the date of registration to Nov. 30 must be made within 50 days of the date of registration. Payment for the period from Dec. 1 to March 31 is due Jan. 31.
- If the business was registered from Oct. 1 to March 31, estimated payments cannot be made.
For health insurance and pension contributions, employers are to submit an Application to Enroll in Employees’ Health Insurance / Employees’ Pension Insurance for each employee to the office of the Japan Pension Service serving that work site.
Taxable Amounts: Premiums paid under the social insurance system are tax-deductible.
For pension contributions, salaries, wages and any employer-paid allowances in return for service performed are included in the contribution calculation. Some standard bonus amounts also are included in a separate calculation.
Withholding Methods: Employee contributions for health insurance, pension insurance, nursing care insurance, and the child care benefit are withheld from salary payments and remitted to the Japan Pension Service, along with employer portions of health and pension contributions. Employee contributions for employment insurance are withheld from salary payments and remitted to the Ministry of Health, Labour, and Welfare, together with employer contributions for employment insurance and workers’ accident compensation insurance.
Returns and Remittance:
The Japan Pension Service collects pension and health insurance contributions. Employers must report to the service from July 1 to July 10 of each year the number of employees as of July 1 and the amount of remuneration paid to each employee during the three-month period from April to June of the current year. The report may be filed electronically using the e-Government Japan portal, by CD or DVD, or by mail or in person at a Japan Pension Service office. The service determines the Monthly Standard Remuneration (MSR) for each employee based upon the MSR table. The resulting determinations are effective from September of the current year to August of the following year.
Contributions administered by the Japan Pension Service must be paid by the last day of the month following the month for which they were assessed. The service sends employers a monthly notice of payment, which is filled out and returned to a financial institution with payment. The financial institution may send the completed notice back to the service, but if the notice is returned to the employer, the employer must send it to the service. Employers may also arrange with their financial institution for payments to be made by electronic funds transfer or by other electronic means.
Labor insurance contributions, which are employment insurance and workers’ accident compensation insurance, are assessed on actual remuneration paid instead of monthly standard remuneration. The two contributions are generally combined for reporting and remittance purposes, but employers in the agriculture, construction, forestry, and fishing industries may need to register for each kind of insurance separately.
From June 1 to July 10 of each year, employers must file a return estimating the total wages to be paid and total labor insurance premiums owed for the labor insurance year. Employers must also pay the premiums assessed for the previous labor insurance year and must make estimated payments of the premiums assessed for the current labor insurance year to the Ministry of Health, Labour, and Welfare.
If the estimated labor insurance payment is at least ¥400,000, it may be made in three installments due July 10, Oct. 31, and Jan. 31 of the following year. However, the general contribution may not be included in installment payments.
Labor insurance returns may be filed and payments made using the e-Government Japan portal, at the prefectural labor department, or at the Labour Standards Inspection Office for the employer’s work site. Effective starting in April 2020, returns are required to be filed electronically, except for newly-registered businesses filing their initial return.
Employers may also arrange with their financial institution to make labor insurance payments using electronic funds transfer. If installment payments are made using EFT, they are instead due Sept. 6, Nov. 14, and Feb. 14.
Other Taxes
Japan’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.
State/Jurisdiction Taxes
There are 47 prefectures in Japan, and each prefecture has a governor and a unicameral assembly. Prefectures have some legislative power but generally follow rules set by the national government. Each prefecture is further divided into municipalities. Japan’s inhabitant taxes are levied by both prefectural and municipal governments.
Coverage: Local inhabitant taxes are determined by an individual’s place of residence on Jan. 1 and are based on the previous year’s income.
The amount of tax due for the year is set on Jan. 1 and must be paid even if the employee leaves the country after the due date.
Nonresidents are not subject to local inhabitant tax.
Rates and Threshold: In general, the tax rates are:
- Municipal Income Tax Rates: 6% of taxable income; and
- Prefectural Income Tax Rates: 4% of taxable income.
As part of the Special Reconstruction Income Tax to aid recovery after the Great East Japan Earthquake, the local inhabitant tax is to be increased by ¥1,000 (¥500 for municipal inhabitant tax and ¥500 for prefectural inhabitant tax) until 2023.
Registration: Employers must submit a report to the appropriate offices of the municipalities detailing the employment income subject to withholding for the preceding year for each employee by Jan. 1 of the current year. The municipal offices assess the inhabitant tax to be collected from employees in 12 equal installments, from June of the current year to May of the following year. Employers are required to deduct from salary payments the amount of each installment and pay it to the municipalities.
Inhabitant taxes on income other than wage, including remuneration paid outside Japan, are generally paid by the taxpayer to the municipality in four installments. The payments are due on June 30, Aug. 31, Oct. 31 and Jan. 31 of the following year.
Taxable Wages: Taxable income for local tax purposes is the same as for the national income tax.
Returns and Remittance: Local tax is paid to the prefectural and municipal governments. Generally, an inhabitant tax return is not required to be filed since the information necessary for assessment is either submitted by employers or included in the final income tax return filed with a national tax office.
Recordkeeping: Generally, taxpayers must maintain books and records in case they are subject to inspection by tax authorities.
Penalties: Failure to pay inhabitant taxes by the deadline may result in a delinquency charge.
COMPENSATION AND BENEFITSThe Minimum Wages Act, the Labour Standards Act and the Industrial Safety and Health Act generally apply to wage and hour issues. Other laws that may apply include the Labor Contract Act, the Labor Union Act, the Employment Security Act and the Part-Time Workers Act. There also are laws against discriminatory treatment of employees, including the Equality Act, the Older Persons Act and the Disabled Persons Act.
In addition, generally all employers are required to enroll employees in the Employees’ Pension Insurance system, withholding a specific amount from each employee’s pay and also making an equal contribution to the system.
Coronavirus (Covid-19) Guidance: Until Nov. 30, 2021, employers may apply to the Ministry of Health, Labour, and Welfare for subsidies to partially or entirely cover the mandatory leave allowances of 60% of an employee’s wages they must pay when employees are absent from work for reasons caused by the employer. To apply, an indicator of business activity such as sales must have decreased by at least 5% for one month when compared to the same month of the previous year.
Since May 2021, the amount of the subsidy varies from two-thirds to 100% of the allowance, depending on the size of the employer and whether employees are temporarily laid off, and the maximum subsidy is either ¥13,500 or ¥15,000 per employee per day. The higher limit applies if the employer reduces working hours at the request of a prefectural government or has an indicator of business activity such as sales decrease by at least 30% on average over the previous three months compared to the same period of the previous year.
Work-from-home payments: Reimbursements of employees’ actual work-from-home costs are not subject to income tax, but work-from-home allowances paid to employees are subject to income tax. Meal vouchers provided to employees working at home are not subject to income tax if the employee pays for at least 50% of the voucher’s value and the portion paid for by the employer is up to ¥3,500 per month after subtracting consumption tax.
Minimum WageIn Japan, minimum wages are set for its 47 prefectures and for some industries within the prefectures. Employers that do not pay at least applicable minimum wage rates to their employees under the Minimum Wages Law may be subject to fines.
Under the Minimum Wages Law, employers are not required to pay the applicable minimum wage to the following categories of employees:
- workers with a significantly lower ability to work due to a mental or physical disability;
- probationary workers;
- workers getting vocational training; and
- workers whose hours are especially short, workers engaged in light work and any other workers specified by the Ministry of Health, Labour, and Welfare.
Effective from October 2021 to September 2022, standard hourly minimum wages range from ¥820 in the Prefectures of Okinawa and Kochi to ¥1,041 in the Prefecture of Tokyo. Effective from October 2020 to September 2021, standard hourly minimum wages ranged from ¥792 in the Prefecture of Akita to ¥1,013 in the Prefecture of Tokyo. Effective from October 2019 to September 2020, standard hourly minimum wages ranged from ¥790 in 15 prefectures to ¥1,013 in the Prefecture of Tokyo.
Almost every prefecture has at least one industry-specific hourly minimum wage that is higher than the prefecture’s standard hourly minimum wage.
The table below indicates the minimum wages for Japan’s 47 prefectures, with the standard hourly minimum wages effective from Oct. 1, 2021, to Sept. 30, 2022, unless otherwise noted, and the industry-specific hourly minimum wages subject to annual adjustment from November to January. Each prefecture has a standard hourly minimum wage and a set of hourly minimum wages for some industries within the prefecture, and the chart indicates each prefecture’s standard minimum wage and range of industry-specific minimum wages. Whenever an industry’s applicable minimum wage in a prefecture is below the standard minimum wage for the prefecture, employers must pay employees at least the prefecture’s standard minimum wage. The prefectures’ names in the chart below generally are linked to web pages of the national Ministry of Health, Labour, and Welfare that contain additional details regarding the minimum wage rates in the prefectures:
| Prefecture | Standard Hourly Minimum Wage (Japanese Yen) | Range of Industry-Specific Hourly Minimum Wages (Japanese Yen) |
|---|---|---|
| Aichi | ¥955 | ¥732 to ¥976 (effective Dec. 16, 2020) |
| Akita | ¥822 | ¥836 to ¥895 (effective Dec. 25, 2020) |
| Aomori | ¥822 (effective Oct. 6, 2021) | ¥825 to ¥903 (effective Dec. 1, 2020) |
| Chiba | ¥953 | ¥848 to ¥995 (effective Dec. 25, 2020) |
| Ehime | ¥821 | ¥810 to ¥938 (effective Dec. 25, 2020) |
| Fukui | ¥858 | ¥830 to ¥874 (effective Dec. 24, 2020) |
| Fukuoka | ¥870 | ¥889 to ¥976 (effective Dec. 10, 2020) |
| Fukushima | ¥828 | ¥834 to ¥870 (effective Dec. 12, 2020) |
| Gifu | ¥880 | ¥887 to ¥971 (effective Dec. 21, 2020) |
| Gunma | ¥865 (effective Oct. 2, 2021) | ¥910 to ¥921 (effective Dec. 31, 2020) |
| Hiroshima | ¥899 | ¥878 to ¥970 (effective Dec. 31, 2020) |
| Hokkaido | ¥889 | ¥889 to ¥967 (effective Dec. 1, 2020) |
| Hyogo | ¥928 | ¥797 to ¥978 (effective Dec. 1, 2020) |
| Ibaraki | ¥879 | ¥874 to ¥945 (effective Dec. 31, 2020) |
| Ishikawa | ¥861 (effective Oct. 7, 2021) | ¥763 to ¥922 (effective Jan. 10, 2021) |
| Iwate | ¥821 (effective Oct. 2, 2021) | ¥767 to ¥863 (effective Dec. 31, 2020) |
| Kagawa | ¥848 | ¥821 to ¥956 (effective Dec. 15, 2020) |
| Kagoshima | ¥821 (effective Oct. 2, 2021) | ¥693 to ¥847 (effective Dec. 24, 2020) |
| Kanagawa | ¥1,040 | ¥821 to ¥894 |
| Kochi | ¥820 (effective Oct. 2, 2021) | ¥793 to ¥910 |
| Kumamoto | ¥821 | ¥796 to ¥888 (effective Dec. 15, 2020) |
| Kyoto | ¥937 | ¥765 to ¥947 (effective Dec. 22, 2020) |
| Mie | ¥902 | ¥739 to ¥942 (effective Dec. 21, 2020) |
| Miyagi | ¥853 | ¥864 (effective Dec. 20, 2020) to ¥925 (effective Dec. 15, 2020) |
| Miyazaki | ¥821 (effective Oct. 6, 2021) | ¥678 to ¥832 (effective Dec. 30, 2020) |
| Nagano | ¥877 | ¥850 to ¥905 (effective Dec. 11, 2020) |
| Nagasaki | ¥821 (effective Oct. 2, 2021) | ¥833 to ¥875 |
| Nara | ¥866 | ¥816 to ¥898 (effective Dec. 31, 2020) |
| Niigata | ¥859 | ¥842 to ¥920 (effective Dec. 18, 2020) |
| Oita | ¥822 (effective Oct. 6, 2021) | ¥716 to ¥951 (effective Dec. 25, 2020) |
| Okayama | ¥862 (effective Oct. 2, 2021) | ¥878 to ¥962 |
| Okinawa | ¥820 (effective Oct. 8, 2021) | ¥683 to ¥835 |
| Osaka | ¥992 | ¥965 to ¥971 (effective Dec. 1, 2020) |
| Saga | ¥821 (effective Oct. 6, 2021) | ¥793 (effective Dec. 2, 2020) to ¥870 (effective Dec. 19, 2020) |
| Saitama | ¥956 | ¥849 to ¥966 (effective Dec. 1, 2020) |
| Shiga | ¥896 | ¥789 to ¥936 effective (Dec. 31, 2020) |
| Shimane | ¥824 (effective Oct. 2, 2021) | ¥750 to ¥922 (effective Nov. 13, 2020) |
| Shizuoka | ¥913 (effective Oct. 2, 2021) | ¥786 to ¥951 (effective Dec. 21, 2020) |
| Tochigi | ¥882 | ¥874 to ¥965 (effective Dec. 31, 2020) |
| Tokushima | ¥824 | ¥875 to ¥928 (effective Dec. 21, 2020) |
| Tokyo | ¥1,041 | ¥829 to ¥871 |
| Tottori | ¥821 (effective Oct. 6, 2021) | ¥718 to ¥809 (effective Dec. 30, 2020) |
| Toyama | ¥877 | ¥769 to ¥912 (effective Dec. 19, 2020) |
| Wakayama | ¥859 | ¥850 to ¥949 (effective Dec. 30, 2020) |
| Yamagata | ¥822 (effective Oct. 2, 2021) | ¥846 to ¥865 (effective Dec. 25, 2020) |
| Yamaguchi | ¥857 | ¥859 to ¥967 (effective Dec. 15, 2020) |
| Yamanashi | ¥866 | ¥914 to ¥919 (effective Jan. 14, 2021) |
The table below indicates the minimum wages for Japan’s 47 prefectures, with the standard hourly minimum wages, that were effective from Oct. 1, 2020, to Sept. 30, 2021.
| Prefecture | Standard Hourly Minimum Wage (Japanese Yen) | Range of Industry-Specific Hourly Minimum Wages (Japanese Yen) |
|---|---|---|
| Aichi | ¥927 | ¥732 to ¥976 (effective Dec. 16, 2020) |
| Akita | ¥792 | ¥836 to ¥895 (effective Dec. 25, 2020) |
| Aomori | ¥793 | ¥825 to ¥903 (effective Dec. 1, 2020) |
| Chiba | ¥925 | ¥848 to ¥995 (effective Dec. 25, 2020) |
| Ehime | ¥793 | ¥810 to ¥938 (effective Dec. 25, 2020) |
| Fukui | ¥830 | ¥830 to ¥874 (effective Dec. 24, 2020) |
| Fukuoka | ¥842 | ¥889 to ¥976 (effective Dec. 10, 2020) |
| Fukushima | ¥800 | ¥834 to ¥870 (effective Dec. 12, 2020) |
| Gifu | ¥852 | ¥887 to ¥971 (effective Dec. 21, 2020) |
| Gunma | ¥837 | ¥910 to ¥921 (effective Dec. 31, 2020) |
| Hiroshima | ¥871 | ¥878 to ¥970 (effective Dec. 31, 2020) |
| Hokkaido | ¥861 | ¥889 to ¥967 (effective Dec. 1, 2020) |
| Hyogo | ¥900 | ¥797 to ¥978 (effective Dec. 1, 2020) |
| Ibaraki | ¥851 | ¥874 to ¥945 (effective Dec. 31, 2020) |
| Ishikawa | ¥833 | ¥763 to ¥922 (effective Jan. 10, 2021) |
| Iwate | ¥793 | ¥767 to ¥863 (effective Dec. 31, 2020) |
| Kagawa | ¥820 | ¥821 to ¥956 (effective Dec. 15, 2020) |
| Kagoshima | ¥793 | ¥693 to ¥847 (effective Dec. 24, 2020) |
| Kanagawa | ¥1,012 | ¥821 to ¥894 |
| Kochi | ¥792 | ¥793 to ¥910 |
| Kumamoto | ¥793 | ¥796 to ¥888 (effective Dec. 15, 2020) |
| Kyoto | ¥909 | ¥765 to ¥947 (effective Dec. 22, 2020) |
| Mie | ¥874 | ¥739 to ¥942 (effective Dec. 21, 2020) |
| Miyagi | ¥825 | ¥864 (effective Dec. 20, 2020) to ¥925 (effective Dec. 15, 2020) |
| Miyazaki | ¥793 | ¥678 to ¥832 (effective Dec. 30, 2020) |
| Nagano | ¥849 | ¥850 to ¥905 (effective Dec. 11, 2020) |
| Nagasaki | ¥793 | ¥833 to ¥875 |
| Nara | ¥838 | ¥816 to ¥898 (effective Dec. 31, 2020) |
| Niigata | ¥831 | ¥842 to ¥920 (effective Dec. 18, 2020) |
| Oita | ¥792 | ¥716 to ¥951 (effective Dec. 25, 2020) |
| Okayama | ¥834 | ¥878 to ¥962 |
| Okinawa | ¥792 | ¥683 to ¥835 |
| Osaka | ¥964 | ¥965 to ¥971 (effective Dec. 1, 2020) |
| Saga | ¥792 | ¥793 (effective Dec. 2, 2020) to ¥870 (effective Dec. 19, 2020) |
| Saitama | ¥928 | ¥849 to ¥966 (effective Dec. 1, 2020) |
| Shiga | ¥868 | ¥789 to ¥936 effective (Dec. 31, 2020) |
| Shimane | ¥792 | ¥750 to ¥922 (effective Nov. 13, 2020) |
| Shizuoka | ¥885 | ¥786 to ¥951 (effective Dec. 21, 2020) |
| Tochigi | ¥854 | ¥874 to ¥965 (effective Dec. 31, 2020) |
| Tokushima | ¥796 | ¥875 to ¥928 (effective Dec. 21, 2020) |
| Tokyo | ¥1,013 | ¥829 to ¥871 |
| Tottori | ¥792 | ¥718 to ¥809 (effective Dec. 30, 2020) |
| Toyama | ¥849 | ¥769 to ¥912 (effective Dec. 19, 2020) |
| Wakayama | ¥831 | ¥850 to ¥949 (effective Dec. 30, 2020) |
| Yamagata | ¥793 | ¥846 to ¥865 (effective Dec. 25, 2020) |
| Yamaguchi | ¥829 | ¥859 to ¥967 (effective Dec. 15, 2020) |
| Yamanashi | ¥838 | ¥914 to ¥919 (effective Jan. 14, 2021) |
While the standard minimum wages for Japan’s prefectures generally are adjusted each year during the first half of October, adjustments to the industry-specific minimum wages for the prefectures typically occur in December. Industry-specific minimum wage adjustments sometimes take effect in November or January. Not all industry-specific minimum wages are annually adjusted.
Overtime
An employer may require an employee to work overtime hours only if there is a written employment agreement signed by both the employer and employee that permits overtime hours to be worked. If there is a written agreement permitting overtime work, the agreement must be submitted to a Labor Standards Inspection Office. Where overtime is necessitated by unforeseen circumstances, the employer must, if possible, obtain advance permission of a Labor Standards Inspection Office before requiring employees to work overtime. If such advance notice is not possible, the employer must notify a Labor Standards Inspection Office after the overtime hours commence.
Overtime hours are those that an employee works in excess of 40 hours in a week or eight hours in a day. Overtime hours generally are limited to 45 hours per month and 360 hours per year. These standard maximum numbers of overtime hours can be exceeded for a limited period only if an employee and employer sign an agreement allowing the employee to work extended overtime hours.
Under provisions of the Work Style Reform Act of 2018, overtime requirements regarding extended overtime hours and overtime premium pay are differentiated among employers until March 31, 2023, based on whether they are large employers or small- and medium-sized employers (SMEs). Starting April 1, 2023, the overtime hour and overtime premium pay provisions are not differentiated among employers based on whether they are large employers or SMEs.
The Japanese government’s definition of SME varies among industry sectors and is based on an employer’s having an amount of capital that is no greater than a specified amount or a number of employees no greater than a specified number, as follows:
- service-industry employers: up to 100 employees or up to ¥50 million of capital;
- retail-industry employers: up to 50 employees or up to ¥50 million of capital;
- wholesale-industry employers: up to 100 employees or up to ¥100 million of capital; and
- manufacturing-industry employers and other employers: up to 300 employees or up to ¥300 million of capital.
Effective since April 1, 2019, for large employers, and effective starting April 1, 2020, for SMEs, there are specified extended maximum numbers of overtime hours that can be worked beyond the standard maximum numbers of overtime hours even if there is an agreement between an employee and employer for the employee to work in excess of the standard maximums, and such an agreement can be established only when there are special circumstances of a temporary nature that require extended overtime hours to be worked. Effective until March 31, 2019, for large employers, and effective until March 31, 2020, for SMEs, there is no specified cap on the number of additional overtime hours that may be worked during a limited period under an agreement between an employee and employer.
Effective since April 1, 2019, for large employers, and effective starting April 1, 2020, for SMEs, the extended maximum number of overtime hours that an employee may work under an agreement between the employee and employer is 100 hours per month and 720 hours per year, including work on holidays or other rest days when they normally would not be required to work; an employee cannot work more than the standard monthly maximum number of 45 hours of overtime for more than six months during any 12-month period; and the monthly average number of overtime hours worked throughout the six applicable months of that 12-month period must be no greater than 80 hours, including work on holidays or other rest days.
Employees who are annually paid at least ¥10.75 million and whose work requires highly specialized expertise may consent to being exempt from the maximum numbers of overtime hours under the Work Style Reform Act, as long as their employer implements steps to safeguard their wellbeing, such as:
- ensuring they take at least 104 days off per year;
- monitoring the number of hours that they work both within and outside the office;
- and any of the following measures, as selected by the employer: establishing a break period between the end of one work period and the beginning of the next, establishing a limit on the total number of hours they work per month or three months, ensuring they take at least one two-week holiday per year, or conducting regular health checks on employees who agree to be exempt from the act’s overtime hours maximums.
Among the types of employees that can choose to be exempted from the act’s provisions regarding maximum numbers of overtime hours are medical doctors, construction workers, and those engaged in research and development.
Employers are required to pay to an employee an overtime premium of 25% for overtime hours that the employee worked during a month for each of up to 60 overtime hours that the employee worked during the month. If an employee works at least 45 overtime hours in a month but not more than 60 hours during the month, the overtime premium customarily is more than 25% and up to 50% as negotiated between the employer and employee.
Large employers are required to pay to an employee an overtime premium of 50% for overtime hours that the employee worked during a month in excess of 60 overtime hours that the employee worked during the month.
Effective until March 31, 2023, SMEs are required to pay an employee an overtime premium of 25% for overtime hours that the employee worked during a month in excess of 60 overtime hours that the employee worked during the month. Effective starting April 1, 2023, SMEs are required to pay an employee an overtime premium of 50% for overtime hours that the employee worked during a month in excess of 60 overtime hours that the employee worked during the month.
Employers may offer paid time off instead of overtime pay if negotiated by labor and management representatives. Employees may take paid leave on an hourly basis up to the equivalent of five days if labor representatives and the company agree to do so.
Japan’s overtime requirements generally do not apply to workers in agriculture, animal husbandry or fishing; to managers, supervisors and persons handling confidential matters; and, if the employer has obtained approval from a Labor Standards Inspection Office, to persons engaged in keeping watch or in intermittent labor.
Hours of Work
The Labor Standards Act sets the regular Japanese workweek at no more than 40 hours per week, with no more than eight hours of work per day, subject to certain exceptions relating to flexible work schedules.
Rest Periods: Employers must provide rest periods of at least 45 minutes if the workday exceeds six hours and at least one hour if the workday exceeds eight hours. This requirement does not apply: to workers in agriculture, animal husbandry or fishing; to managers, supervisors and persons handling confidential matters; or if the employer has obtained approval from a Labor Standards Inspection Office, to persons engaged in keeping watch, or to those performing intermittent labor. In addition to those rest periods, a female employee with a child under 1 year old is entitled to two 30-minute periods a day, without pay, to care for the infant.
Rest Days: Employers must provide workers with at least one rest day per week or at least four rest days during a four-week period. The law governing rest days does not apply to workers in agriculture, animal husbandry or fishing; to managers, supervisors and persons handling confidential matters; or if the employer has obtained approval from a Labor Standards Inspection Office, to persons engaged in keeping watch or in intermittent labor.
An employee that works on a rest day must be paid an hourly shift premium of 35% of the regular hourly pay that the employee would have been paid for regular hours worked on days other than rest days.
Late-Night Work: For late-night work an employee performs, which is work performed between 10 p.m. and 5 a.m., the employee generally must be paid a shift premium of 25% of the regular pay that the employee would have been paid for regular hours worked outside this span of hours, although higher shift premiums are applicable in some circumstances.
The hourly shift premium for late-night work performed during overtime hours generally is 50% of the regular hourly pay that the employee would have been paid for regular hours worked outside this span of hours, however for late-night work performed during overtime hours in excess of 60 overtime hours in a month the hourly shift premium is 75% of the regular hourly pay that the employee would have been paid for regular hours worked outside this span of hours.
The hourly shift premium for late-night work performed during rest days is 60% of the regular hourly pay that the employee would have been paid for regular hours worked outside this span of hours.
Holidays
The declaration of a national holiday is not binding on private businesses, and employers are not required to provide employees with paid or unpaid leave for such holidays. However, it is customary for employers to provide employees working in Japan with paid leave for some or all of the national holidays.
The 16 national holidays of Japan are as follows:
- Jan. 1: New Year’s Day, celebrating the start of a new Gregorian calendar year.
- Coming of Age Day, also known as Adult Day, the second Monday in January, celebrating those who achieve Japan’s age of majority, which effective until March 31, 2022, is 20, and which effective starting April 1, 2022, is 18.
- Feb. 11: National Foundation Day, also known as Foundation Day, celebrating the legendary establishment of Japan on Feb. 11, 660 B.C.E.
- Feb. 23: Emperor’s Birthday (starting in 2020), celebrating the birthday of the current emperor of Japan. The date of this holiday is affixed to the actual birthday of the current emperor, instead of a variable date based on the emperor’s actual birthday.
- Vernal Equinox Day: either March 20 or March 21, with rare exceptions, based on when there is to be a sufficiently equal number of daytime and nighttime hours from the perspective of Japan, marking the start of Spring of a particular year, due to Earth’s revolution around the Sun. The time zone used for consideration of whether there is an equal number of daytime and nighttime hours is Japan Standard Time. The holiday not only celebrates the start of Spring, but highlights respect for nature and fauna.
- April 29: Showa Day, commemorating the Showa Era of Japan, which is celebrated on this date because it is the birthday of Emperor Showa.
- May 3: Constitution Memorial Day, also known as Constitution Day, celebrating the anniversary of when Japan’s constitution took effect on May 3, 1947.
- May 4: Greenery Day, also known as Green Day, commemorating nature and thanking the natural world.
- May 5: Children’s Day, celebrating children throughout Japan.
- Marine Day, also known as Sea Day, the third Monday in July, celebrating the splendor of the oceans and seas and recognizing the value of marine life.
- Aug. 11: Mountain Day, celebrating the grandeur of Japan’s mountains.
- Respect for the Aged Day, also known as Respect for Elders Day, the third Monday in September, celebrating and honoring those who have achieved advanced age.
- Autumnal Equinox Day: either Sept. 22 or Sept. 23, with rare exceptions, based on when there is to be a sufficiently equal number of daytime and nighttime hours from the perspective of Japan, marking the start of Autumn of a particular year, due to Earth’s revolution around the Sun. The time zone used for consideration of whether there is an equal number of daytime and nighttime hours is Japan Standard Time. The holiday not only celebrates the start of Autumn, but highlights respect for ancestors.
- Sports Day, the second Monday in October, celebrating the glory of physical, mental, and spiritual fitness.
- Nov. 3: Culture Day, celebrating Japanese culture.
- Nov. 23: Labor Thanksgiving Day, celebrating and giving thanks to workers of Japan.
If a national holiday would occur on a Sunday, it is celebrated on the next day that is not a holiday, generally the immediately following Monday. When a holiday occurs on a Saturday, there is no substitute holiday. Government offices, banks and most nonretail businesses are closed on national holidays, but many restaurants and stores remain open.
Leave
Annual Leave: Article 39 of the Labor Law gives the minimum amount of paid vacation for employees. The number of paid vacation days an employee earns is based on the employee’s seniority in the company.
The range of paid vacation days earned based on seniority is 10 days for six months of seniority to 20 days for 6.5 years of seniority.
The numbers of paid vacation days earned for applicable levels of seniority are as follows:
- 6 months seniority: 10 days paid vacation days earned
- 1.5 years seniority: 11 days paid vacation days earned
- 2.5 years seniority: 12 days paid vacation days earned
- 3.5 years seniority: 14 days paid vacation days earned
- 4.5 years seniority: 16 days paid vacation days earned
- 5.5 years seniority: 18 days paid vacation days earned
- 6.5 years seniority: 20 days paid vacation days earned
Employees may accumulate up to two years’ unused paid vacation. After two years, the unused paid vacation is forfeited. For example, an employee with two and half years of service may accumulate a maximum of 23 paid vacation. The paid vacation earning schedule above is applicable only when employees worked more than 80% of the total working days of the previous year.
Family care leave: Under the Child Care and Family Leave Law, if a family member of an employee needs constant care for two or more weeks because of an injury, sickness, or physical or mental disability, an employee is entitled to two forms of partially paid family care leave: five days a year to take care of one family member or 10 days a year to take care of two or more family members and up to 93 days for each time a family member needs care.
Instead of full leave for the 93 days, the employee may request shorter hours or flextime during that period.
An employer may refuse a request for family care leave only under the following circumstances: if the worker is requesting the first form of leave and has been with the employer for less than six months; if the worker is requesting the second form of leave and has been employed by the employer for less than one year; if the worker is requesting the second form of leave, is on a fixed-term contract and it is clear that the employment relationship will end within 93 days of the requested beginning of the leave; or if the employee works two days or fewer per week.
Although employers are not required to pay wages during family care leave unless the employer’s work rules provide for this, the Employment Insurance Law provides for an allowance of 40% of the employee’s wages during the leave, which is paid from the government-operated employment insurance program.
Sick child leave: An employee who is raising a child who is not yet of elementary school age may take leave without pay to care for the child in the event of illness or injury. Such leave is limited to five working days per fiscal year for parents with one preschool-age child and 10 days for those with two or more. An employer may refuse a request for sick child leave only if it is prohibited under a collective bargaining agreement and the following circumstances exist: the requesting employee has been employed by that employer for less than six months or an ordinance of the Ministry of Health, Labor and Welfare identifies the employee’s position as one for which good cause exists to deny a request for leave.
Sick leave: Employers are not required to provide sick leave, but it may be included in an employer’s work rules or in collective bargaining agreements. Japan’s national health insurance program entitles employees to two-thirds of the applicable standard wage as sick leave allowance after three days of absence for 18 months.
Child care leave: An employee is entitled to up to one year of partially paid leave to care for a child. Such leave generally may not extend beyond the child’s first birthday, although in certain limited circumstances the leave can be extended until the child is 18 months old. Under the revised Child Care and Family Care Leave Law passed in 2009, the leave also may extend until the child is 14 months old if the worker’s spouse has also taken at least a day of leave to take care of the child.
The central changes in the revised Child Care and Family Care Leave Law include: 1) changing the work styles of workers with parenting responsibilities to allow these workers to work shorter hours or to be exempted from overtime, and to provide expanded leave when children are sick or injured; 2) establishing a system that encourages fathers to take child care leave; 3) allowing workers to take leave for family care on a daily basis; and 4) establishing an arbitration system for resolving disputes and publishing the names of violators of the law.
An employer may refuse a request for child care leave only if a worker is prohibited from taking leave under a collective bargaining agreement and only if the following circumstances apply:
- the employee has worked for the employer for less than one year;
- in the case of a fixed-term worker, it is clear that the employment relationship will end before the child turns 1 year old; or
- the employee works two days or fewer per week.
Under the revised law, workers with parenting responsibilities for a child less than 3 years of age must be exempted from overtime work.
Although employers are not required to pay wages during child care leave unless the employer’s work rules provide for this, the Employment Insurance Law provides for an allowance of 30% of the employee’s wages during child care leave, which is paid from the government-operated employment insurance program. If after the worker returns to work he or she stays with the company for six months, the employee would then receive an additional 10% of wages for the period of the leave.
Maternity leave: A female employee is entitled to take maternity leave for up to six weeks preceding the expected date of birth, or up to 14 weeks if she is expected to give birth to more than one child. After childbirth, the mother is required to take at least six weeks off and may take as many as eight weeks’ leave. If the woman returns to work after six weeks, she must be given duties that her doctor has certified will have no adverse effect upon her. During pregnancy and within one year after childbirth, female employees must not be assigned to handle heavy materials, work around harmful gases, or be given other duties that may be harmful during pregnancy, childbirth or the nursing of a child. Although an employer need not pay wages during maternity leave unless the employer’s work rules provide for this, employment insurance provides for compensation of 60% of the employee’s wages for six weeks of maternity leave prior to childbirth—14 weeks if the mother is expecting more than one child—and eight weeks after childbirth.
Civil Rights and Public Duty Leave: An employee is entitled under the Labor Standards Act to take time off to vote or perform other public duties. There is no requirement that an employer compensate an employee for this leave.
Compensation for Absence From Work Caused by Employer: When an employee’s absence from work was caused by the employer, such as in a temporary layoff, the employer must pay the employee an allowance equal to 60% of his or her normal wages.
Menstruation leave: Under the Labor Standards Act, an employer must provide leave if a woman requests it because work during her menstrual period “would be especially difficult.” The employer is not required to pay wages during such leave.
Wage Payment
Employees are paid at least once a month on a specific date in legal tender. Employers may pay wages directly to an employee’s bank account if the employee agrees. Traditionally, Japanese workers receive monthly wages.
Employers must issue a payment slip stating the amount of the salary and the amount of tax withheld at the time of payment.
Bonuses and Special Benefits
Japan does not mandate employers to provide bonus payments to employees but two additional bonus payments, one in the summer and another in the winter, are customary. The summer bonus typically is paid in June or July and the winter bonus typically is paid in December.
Termination Pay
When an employee is terminated, the Labor Standards Act requires the employer to pay wages due within seven days. Severance pay is not mandated by law.
Workers’ Compensation
Workers’ compensation, known as workers’ accident compensation insurance, is overseen by the Ministry of Health, Labour, and Welfare. Information regarding contributions, which are generally combined with employment insurance and together known as labor insurance contributions, is available in social taxes. All businesses with at least one employee are covered by workers’ compensation.
Generally, benefits cover the costs of medical treatment in full. Benefits paid when employees cannot work and are not receiving wages are based on a calculated daily amount using the employee’s average wages from the three months prior to the injury or illness, subject to daily minimums that may be adjusted each year, and start with the fourth day of absence. Employees who undergo medical treatment for at least 18 months for the same injury or illness may receive a pension or lump sum payment, depending on the degree of disability and calculated using the same daily benefit amount.
Other kinds of benefits, including those for disabled employees, survivors’ benefits, and funeral expenses, may also be paid as either pensions or lump sum payments, depending on the degree of disability, and are calculated using the same daily benefit amount.
Recordkeeping
Employers in Japan must maintain records regarding compensation and benefits provided to employees.
FOREIGN WORKERS
The Immigration Control Act outlines the basic legal framework for foreigners wishing to work in Japan.
Visas: In order to work in Japan, a foreigner must obtain a Certificate of Eligibility and then the appropriate visa. A Certificate of Eligibility is issued by a regional immigration authority under the jurisdiction of the Ministry of Justice as evidence that the applicant fulfills various conditions of the Immigration Control Act, including those certifying that the activity in which the foreigner wishes to engage in Japan is valid and falls under a status of residence (excluding Temporary Visitor Status). The application process can be handled by a proxy, including a future employer, a non-profit organization or an immigration lawyer.
Work visas are restricted to certain professions including professor, artist, entertainer, religious activities, journalist, investor/business manager, legal/accounting services, medical services, researcher, instructor, engineer, specialist in humanities/International Services, and skilled labor. These visas are good for either 1 year or 3 years.
Japan will begin using a points-based system that provides highly skilled foreign professionals with preferential immigration treatment. The activities of the highly skilled foreign professionals will be classified into 3 categories: academic research activities, advanced specialized/technical activities and business management activities. According to characteristic features of each category of the activities, points will be given to items such as “academic background,” “working record,” “annual salary” and “research performance.” If the total points reach a certain number, preferential immigration treatment will be granted to the applicable person.
Taxes: Nonresidents are subject to income tax on their income from sources in Japan. Nonresidents generally are taxed at a flat tax rate of 20.42% for their employment income.
In order to eliminate double taxation on income, a tax payer who pays foreign taxes, national, or local, which are similar to Japanese income tax may choose to have the amount of those foreign taxes credited against his/her Japanese income tax.
Wages/Payments: There are no special requirements for payment of foreign employees.
Termination: There are no special requirements for termination of foreign employees.
Foreign workers covered by the Employees’ Pension Insurance (EPI) system for a short period can claim benefit payments within two years after departure from Japan. Such worker can file claims if they contributed for at least 6 months of coverage periods under the EPI system and are not otherwise eligible for pension benefits.
WORKING IN THE UNITED STATES
Foreign workers from Japan must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate
Japan is eligible for the visa waiver program for business visitors, which allows Japanese citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for reasonable length of time is at the discretion of the Department of Homeland Security.
Japanese workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.
For tax purposes, Japanese citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. Japan has both a tax treaty and a social tax totalization agreement with the U.S.
State and local taxation of Japanese workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes: Generally, nonresidents in the U.S. who are from Japan and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.
A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Japan and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.
Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.
Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: Japan and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the ith the employer.
Students, trainees, researchers and teachers in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of teaching or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of studying or engaging in research for a period of two years by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. There is no exemption limit placed on student and teacher compensation for Japanese residents.
Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.
Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will only pay into one of the social security systems- either the home or the foreign system- but not both. Foreign nationals, utilizing a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.
Japan and the U.S. have entered into a totalization agreement and a summary of those provisions is included in
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
Japan has entered into more than 60 income tax treaties, including an income tax treaty with the United States. Japan has a totalization agreement with the United States for social tax coverage purposes.
The countries with which Japan has a bilateral income tax treaty in effect are Armenia, Australia, Austria, Bangladesh, Belarus, Belgium, Brazil, Brunei, Bulgaria, Canada, Chile, China, Croatia, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Fiji, Finland, France, Georgia, Germany, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, Moldova, Netherlands, New Zealand, Norway, Oman, Pakistan, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Vietnam, and Zambia. Japan’s bilateral income tax treaty with Jamaica generally took effect Sept. 16, 2020.
Japan additionally has an income tax treaty in effect with Taiwan (the Republic of China).
Japan also has an income tax treaty in effect with the special administrative region of Hong Kong.
Furthermore, Japan has an income tax treaty in effect with the United Kingdom territory of Bermuda.
Japan has totalization agreements for social tax purposes with 20 countries. It has agreements with Australia, Belgium, Brazil, Canada, China, Czech Republic, France, Germany, Hungary, India, Ireland, Luxembourg, Netherlands, Philippines, Slovakia, South Korea, Spain, Switzerland, United Kingdom, and the United States.
RESOURCES
All websites in English unless otherwise noted.
General
Constitution of Japan
U.S. State Department:
- U.S. Relations With Japan
- International Travel Information: Japan
U.S. Central Intelligence Agency:
- The World Factbook: Japan
- The World Factbook: Languages
U.S. Department of Commerce:
- Export.gov: Japan - Market Overview
- Export.gov: Japan - Business Travel
U.S. Library of Congress:
- Guide to Law Online: Japan
- Global Legal Monitor: Japan
- Japanese Kana Romanization Table
Currency Details
International Organization for Standardization: Currency Codes - ISO 4217
Unicode Consortium: Currency Symbols
United Nations: United Nations Terminology Database: Japan
Taxes
National Tax Agency (Japanese)
Ministry of Economy, Trade and Industry (Japanese)
Japan Pension Service (Japanese)
Ministry of Health, Labour and Welfare (Japanese)
Japan External Trade Organization (Japanese)
- Taxes in Japan
- Japan’s Social Security System
Defined Contribution Pension Law (2001)
Employment Insurance Act (1974)
Employment Security Act (1947)
National Tax Agency, Tax Treatments Related to the New Coronavirus Pandemic (Japanese)
Compensation and Benefits
Employment Measures Act (1966), including 2009 revisions
Labor Contracts Act (2007)
Labor Relations Adjustment Act (1946)
Labor Standards Act (1947)
Act on Stabilization of Employment of Elderly Persons (1971)
Act on the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave (1991)
Minimum Wage Act (1959)
Security of Wage Payment Law (1976)
Basic Law for Persons With Disabilities (1970)
Act on Arrangement of Relevant Acts on Promoting the Work Style Reform, Law No. 71 of July 6, 2018 (Work Style Reform Act) (Japanese)
Workers’ Accident Compensation Insurance Act (1947) (Japanese)
International Labour Organization, Industrial and Employment Relations Department: National Labour Law Profile: Japan
The Japan Institute for Labour Policy and Training
Ministry of Health, Labour, and Welfare
National Tax Agency, Frequently Asked Questions Regarding Work-From-Home Payments (Japanese)
Foreign Workers
Embassy of Japan in the United States of America: Visa Information
Ministry of Foreign Affairs of Japan: Visa
Tax Handling Related to the New Coronavirus Infection
Working in the United States
U.S. Department of Labor:
- Foreign Labor Certification
- Hiring Foreign Workers
U.S. Internal Revenue Service:
- IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
- IRS Publication 15, Circular E, Employer’s Tax Guide
- IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS Publication 519, U.S. Tax Guide for Aliens
- IRS Publication 901, U.S. Tax Treaties
U.S. Department of State: Visa Waiver Program