Taxation Q&A of Nonresidents and ForeignersIntroduction:We have nowadays had a lot of guest workers or foreign employees working in Japan; however, some foreigners may not pay taxes for the various reasons. For instance, the administration's support may not be enough, or we, Zeirisi (Licensed Tax Accountant-Attorney), might not support them adequately.Q1. I have a German friend who is planning to go back to German this year. He wants to rent out his apartment. How can he pay tax for his rent revenue?A1. He loses his address in Japan. Therefore, his resident status is Nonresident, yet he has to file a return because he has the income from his rent which is called Withholding Income. In this case, the point is whether he can do a blue return or not. We suggest that you or a corporation apply a blue return as his tax payment manager.Q2. Our company commissions a Japanese professor in England to do English translations. We buy English translations and publish them. What should we do about this transaction?A2. Transfer of the Copyright is applicable to income from sources in Japan. Your company pays usually 20% of income tax until 10th of the next month. However, Japan has a treaty between England, so if your company meets necessary conditions, the tax is 10%.Q3. Mr. G, who is French, left for his new executive in April. His term is 2 years. Mr. G came to Japan using 6 month visa, and he lived in a company house. When will he be "resident"?A3. "Resident is a person who has a 'JUSHO' (Domicile) in Japan or has had a 'KYOSHO' ( Residence) in Japan for one year or more. Generally speaking, you have a 'JUSHO' in Japan if your principal establishment for living is in Japan, and you have a 'KYOSHO' in Japan if you are staying or living in Japan without 'JUSHO" (http://www.taxanswer.nta.go.jp/12001.htm). Mr. G pays income tax from Japan and England if he is a resident. On the other hand, he only pays taxes for income from Japan if he is a nonresident. For his case, his income from Japan and England is taxable in Japan because he got a house for his work; nevertheless, his visa is valid for 6 month.Q4. I hire an American woman as an English teacher who lives in Japan with her husband. Her husband works for the U.S. army. How is this taxable?
A4. Deduct 20% of the source when you pay her. While the U.S. army and their family stay in Japan, their resident statuses are nonresident on account of the Japan-U.S. treaty.
Q5. Our company decided to transfer employees temporarily to the U.S. Corporation for three years. The U.S. Corporation pays our employees' wages, but our company pays family allowance to their family in Japan. Do we have to pay allowance at source in Japan?A5. No. Your employees are nonresident, so allowances are not taxable.Q6. An employee from French headquarters is transferred to a branch office in Japan in March for 9 month. The wage is paid from French headquarter to the family in French. Is this taxable in Japan?A6. Yes. According to the treaty between Japan and French, the income from source in Japan has to be paid in Japan because the stay is more than 183 days in Japan.Q7. I am Japanese, and I hired foreign employees for the first time. I do not know what to do about the tax.A7. As Japanese people do, foreign employees need to do the taxes. In this case, if foreign employees are "Resident", they need to pay the taxes. If foreign employees are "Nonresident", 20% of their incomes are taxable.Q8. Do foreign employees need to apply the social insurance?A8. YesQ9. I am Japanese and planning to hire foreign people. What should I be careful?A9. Immigration Bureau of Japan prescribes law for foreign people. According to the law, foreign people are able to work if they are technicians such as a diplomat and medical service. In addition, they are permanent residents or Japanese spouses.Q10. I am an American citizen, and I have been working in Japan for 5 years. I am thinking about selling my real estate in California. Do I pay the tax in Japan?A10. You are categorized as "Permanent Resident". Therefore, you need to pay the tax in Japan when you sell your real estate in California. You also need to pay the tax in US according to the Japan-US treaty.Q11. Mr. X is an American citizen and has worked for a Japanese company for 30 years. He decided to go back to the US. He is supposed to get the pension from the Japanese government. Is this pension taxable in Japan?A11. Mr. X is categorized as "Nonresident" when he goes home. According to the Japan-US treaty, the pension is taxable only in US. Mr. X do not pay the tax in Japan.Q12. My employees went to work at San Francisco branch for 10 months. During the employees' stay, I will pay them in US dollars.A12. The employees are categorized as "Resident". Therefore, they need to pay "the income from sources in Japan" However, the wages were paid in US dollars, so it needs to be changed from US dollars to Japanese yen.