Q. Can you tell us more about
social insurance and tax
payments for working people?
A.Under the Japanese social insurance system, people who work for companies have labor insurance and medical insurance, and the companies take care of the enrolment procedure on behalf of the employee. As a general rule, non-Japanese employees must also enter the insurance system. Tax incurred as part of working will be either income tax (payable to the national authorities) or residence tax (payable to the city of Tokyo or the local municipal authorities), and will be automatically deducted from your wages by your employer. If you live in Japan for a year or more and have an income, you are required to pay tax just like the Japanese do.
- 1 Workers' accident compensation insurance
- This insurance is paid to those who suffer injury or illness while working or traveling to/from work. The employer bears the entire cost of these insurance payments.
- 2 Employment insurance
- This insurance is paid to those who lose their employment. So that working people are not troubled in their daily lives, this insurance supports them while they search for their next job.
Healthcare and pensions
- 1 Health insurance
- This payment means you have to cover only 30% of your costs incurred due to illness or injury. Payment is also received in case of death or childbirth.
- 2 National pension & employee's pension insurance
- This insurance is paid to working people when they reach old age or suffer some disability or death. In the case of non-Japanese workers, they can recover (as a lump-sum withdrawal payment*) some of the amount paid while enrolled in the insurance system.
※Lump-sum withdrawal payment: Funds paid upon request to non-Japanese who have participated in a pension scheme for six months or longer, payable within 2 years of their return to their home country.
Tax relating to income
- 1 Income tax
- Income tax is incurred for the entire amount earned from January to December of any given year. Estimated income tax payments are automatically deducted from your monthly paycheck, with the correct tax amount adjusted in December (year-end adjustment).
- 2 Residence tax
- This tax is payable to the local municipal authority wherever you are registered as living on January 1 of each year. The amount of tax changes depending on the amount of income you earned in the previous year, as well as whether you have a family, etc.
Age: 40s Designer
Because I'm part of my employer's health insurance system, if I suffer some illness or injury I just show my insurance ID at the hospital and I only have to pay 30% of the costs. When I gave birth in Japan, I was able to receive nearly 400,000 yen as a lump-sum childbirth payment, which meant my hospital expenses were nearly nothing at all.