How to Appoint a Tax Representative in Japan
A tax representative is a legal entity or an individual that fulfills non-residents’ tax obligations such as filing tax returns, receiving documents from tax authorities, paying taxes, and receiving refunds (還付金 kanpukin).
This article covers who can be your tax rep in Japan, where to find the Japan tax representative form, and your FAQs about this role.
What is a tax representative in Japan?
In Japan, tax representatives are referred to as nouzeikanrinin ( 納税管理人= のうぜいかんりにん ).
The following are some of the responsibilities of a Japan tax representative:
Filing income tax returns of nonresidents and paying various taxes.
Receiving refunds from the government, such as the pension lump sum withdrawal for foreigners who have left Japan.
Receiving various documents sent from the tax agencies.
But when exactly will you need to take advantage of a tax representative? Or to put it differently, when will you have legal obligations that require you to set up a tax representative for yourself?
Here are some cases where it is beneficial to have a Japanese tax rep:
You do not have an address in Japan, but you have assets in Japan that are generating income, such as real estate or interest and dividends received from a Japanese company.
You do not live in Japan, but you have tax obligations such as inheritance tax (相続税), gift tax (贈与税) and fixed asset tax (固定資産税).
You plan to leave Japan, but you need someone to pay your resident tax bill.
Because the Tax Office only accepts bank accounts in Japan for pension refunds, you will need to appoint a resident in Japan (your tax representative) with a Japanese bank account to receive your tax refund.
You are a foreign corporation with no branches or offices in Japan but want to transfer assets in Japan. There may be cases in which such transaction will be subject to consumption tax (消費税).
The above is not an exhaustive list. However, the more common cases in which foreigners require a Japanese tax representative are for their (a) pension withdrawal payment when you leave Japan and (b) for the resident tax payment on their income tax return.
Eligibility criteria for becoming a Japan tax representative
When it comes to appointing a tax representative who can pay taxes on your behalf, anyone with a residential address in Japan is generally eligible.
There are no specific qualifications or restrictions, such as being a close relative or having to be a legal entity, so you can choose any individual as your tax representative.
However, if you need more than just document handling and want assistance with tax return preparation or tax planning for savings, it's advisable to appoint someone with a certified public accountant (CPA) qualification.
Regardless of your choice, it's essential to entrust this role to someone you trust and who is competent and proficient in carrying out these duties.
How to appoint a tax representative in Japan
When appointing a tax representative, you must submit a "納税管理人の届出書 Notification Form of Appointment of Tax Agent" to the tax office responsible for your tax jurisdiction.
Image. Notification Form of Appointment of Tax Agent
However, it's important to note that if the one appointing the tax representative has real estate in Japan and has rental income, the form should be submitted to the tax office in the jurisdiction where that real estate is located.
The notification form for the tax representative should include information about the reason for the appointment. You can find an example of the form filled out in English here.
You should submit this form to the tax office responsible for the taxpayer's tax jurisdiction either on the appointment date or before the departure date from Japan.
Fees for hiring a tax representative in Japan
If you have a friend or family member who is familiar with tax-related paperwork, you may not have to pay at all.
But if you decide to hire a tax representative who is a certified public accountant (CPA), it is common to establish a consulting agreement where you pay a monthly fee and an additional fee only during busy months like the tax filing season.
The monthly fee typically depends on the complexity of the administrative work required. For routine tasks, it can be around 5,000 yen and usually doesn't exceed 10,000 yen.
However, for tasks that involve a significant amount of work, such as inheritance tax procedures, the standard consulting agreement may not cover all the work required.
In such cases, you may need to pay additional fees beyond the monthly retainer to compensate for the extra workload.
What are the penalties for non-compliance with Japan's tax laws?
The following are penalties for non-compliance with Japan's tax laws.
Additional tax for failure to file (無申告加算税)
This penalty occurs if you fail to submit the required tax returns by the deadline. It can range from 5% to 20% of the amount you should have paid.
Additional tax for understatement (過少申告加算税)
If you intentionally or inadvertently report a lower income than what you should have, you may be subject to this penalty. It can amount to 5% to 15% of the additional tax owed.
Additional tax for fraud (重加算税)
If fraudulent activities or tax evasion are discovered, you may face this penalty, which can range from 35% to 40% of the amount you should have paid.
Delinquent tax (延滞税)
Failing to make tax payments by the due date can result in this penalty, which can be between 2.5% and 14.6% of the unpaid amount.
Frequently asked questions
What does a tax representative do?
The scope of work of a tax representative is strictly tax-related. So paying utility bills and receiving pension refunds is technically not their job, although they very well could do it for you.
How to change or remove a tax representative?
If there's a need to dismiss the previously appointed tax representative, such as when returning and becoming a resident again, a "納税管理人の解任届出書 Notification of Dismissal of Tax Agent" must be submitted to the tax office in charge of the resident's tax jurisdiction.
Can anyone become a tax representative?
When it comes to appointing a tax representative who can pay taxes on your behalf, anyone with a residential address in Japan is generally eligible. However, if you need more than document handling and want assistance with tax return preparation or tax planning for savings, it's advisable to appoint someone with a certified public accountant (CPA) qualification.
A tax representative for Japan is someone who will carry out a variety of tax duties, such as the pension lump sum withdrawal for those who leave Japan.
Technically, anyone can be a tax representative—so long as the tax representative form has been filed with the taxpayer's presiding tax office.
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