Withholding income tax applicable to domestic firm in Japan

A corporation that make certain payment to residents in Japan is obligated to withhold taxes from the source upon payment. Please note that collecting withholding taxes and paying to the government is the responsibility of a payer of income rather than a payee. Failure to collect withholding taxes can lead to such penalties as additional tax on non-payment or overdue tax on payer of income.


Payments subject to withholding income tax are as follows.

 

1.Salary, bonus, retirement benefit

2.Professional fees to lawyers, certified public accountants, certified public tax accountants,etc.

3.Dividends

4.Professional sports players

5.Other


Timing of payment to the government is no later than 10th day of the following month when the above payment is made. If a corporation has fewer than 10 employees and submits notification to the tax office, special provision can be applied and allow a corporation to pay semiannually.