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Residency for Tax vs Immigration Purposes

March 15… It’s the deadline for filing for income tax adjustment and paying your income tax in Japan.

Tax season may be a difficult time for sole business proprietors as they need to prepare their own tax adjustments whether they outsource the assignments to a tax accountant or not. Even salaried workers whose income taxes are withheld may need to file for tax adjustment to receive deductions for such things as medical expenses, housing loans, and charitable donations. Tax-related matters are not my area of expertise, but I will briefly explain tax concerns related to residency status and permanent residency.

Residency for Tax vs Immigration PurposesPhoto by Kelly Sikkema on Unsplash

Resident for tax purposes (税務上の居住者)

For tax purposes, a resident is an individual (i) who has a ‘jusho’ (住所 i.e., a residence) in Japan; or (ii) who has stayed in a ‘kyosho’ (居所 i.e., a temporary domicile) in Japan for one year or more.

Residents (居住者) are then further divided for tax purposes into “non-permanent residents (非永住者)” and “residents other than non-permanent residents” (非永住者以外の居住者) (Explanation of “residents other than non-permanent residents” will be omitted here). “Non-permanent residents” are individuals who do not have Japanese nationality and have had a residence (住所) or temporary domicile (居所) in Japan for less than 5 years within the past 10 years. Non-permanent residents are taxed on income generated in Japan (domestic source income) plus income other than domestic source income (foreign source income) paid or remitted in Japan.

Confusingly, in some cases, a person who has “Permanent Resident” status for immigration purposes may simultaneously be considered a “Non-Permanent Resident” for tax purposes” In the case of an application for a permanent resident permit from a Highly Skilled Profession, it is possible to be granted permanent resident status after not having lived in Japan for five years, and thus be considered a permanent resident under the Immigration Control and Refugee Recognition Act (出入国管理及び難民認定法), but a non-permanent resident for tax purposes.

When applying for an extension of period of stay or permanent resident permit, it is common to submit a certificate of taxation of resident tax as an income certificate. We recommend that you consult with a tax specialist for more details so that your application for an extension of stay or permanent resident permit will go smoothly.

Disclaimer: While every effort has been made to ensure that the information on this article is accurate at the time of posting, it is not intended to provide legal advice as individual situations will differ. If you do require advice or wish to find out more about the information provided and related topics, please contact the author.

Text by: Masayo Boston (Certified Administrative Procedure Legal Specialist), March 2023
Legal Associates Office Boston (Fukuoka City)
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Fukuoka Prefecture
Published: Mar 14, 2023 / Last Updated: Mar 14, 2023

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