Japanese Business Glossary

源泉徴収税 (gensen choshūzei) translates to "withholding tax" in English.

It refers to the tax deducted at the source of income, meaning the payer of the income withholds a portion of the payment and pays it directly to the tax authorities. This system ensures that taxes are collected in advance and helps to prevent tax evasion.

In Japan, withholding tax is commonly applied to various types of income, including salaries, bonuses, interest, dividends, and certain payments to non-residents. Employers, financial institutions, and other entities responsible for making payments must withhold the appropriate amount of tax and remit it to the National Tax Agency.

The rates and specific rules for withholding tax can vary depending on the type of income and the residency status of the recipient. For example, the standard withholding tax rate on salary income for residents is based on progressive tax rates, while non-residents might face a flat rate on certain types of income.

Properly managing withholding tax obligations is crucial for businesses operating in Japan to remain compliant with tax regulations.

控除 (kojo) is a tax deduction in Japan. It refers to the amounts that can be subtracted from an individual's total income to reduce their taxable income. By lowering the taxable income, tax deductions can significantly decrease the amount of tax an individual owes.

Various types of deductions are available, each designed to provide financial relief for specific circumstances. Common deductions includes those for dependents, medical expenses, social insurance premiums, and mortgage interest. For instance, the spousal deduction and dependent deduction help families reduce their tax burden by acknowledging the financial responsibilities of supporting a spouse or dependents.

To claim these deductions, taxpayers must provide the necessary documentation and meet certain eligibility criteria. Properly utilizing deductions are crucial for effective tax planning, as it can lead to substantial tax savings. Understanding and applying the appropriate deductions can help individuals manage their finances better and ensure compliance with tax regulations.

青色申告会 (aoiro shinkoku kai) is a Japanese term that translates to "Blue Return Association" in English. This association supports individuals and small business owners who choose to file their taxes using the blue return system, which is a more detailed and beneficial tax filing method in Japan.

The blue return system (青色申告, aoiro shinkoku) offers various tax advantages, such as higher deductible expenses and special allowances. Members of a 青色申告会 can receive guidance, resources, and assistance in preparing and submitting their blue returns accurately and efficiently. These associations often provide seminars, workshops, and personalized consultations to help members maximize their tax benefits.

賦課 (fuka) is a Japanese term that translates to "levy" or "imposition" in English. It refers to the act of imposing or assessing a tax, fee, or charge on individuals or entities. This term is commonly used in the context of taxation, where a government or authority assigns a financial obligation to taxpayers based on certain criteria, such as income, property, or transactions.

In a broader sense, 賦課 can also refer to the imposition of duties or responsibilities, not just limited to financial charges. The goal of 賦課 is to generate revenue for public services, infrastructure, or other governmental needs.

ふるさと納税控除 (furusato nozei kojo) in Japanese refers to the "hometown tax deduction." This system allows taxpayers in Japan to make donations to local municipalities, typically to support regional development or specific projects. In return for their donations, taxpayers receive tax deductions on their income tax and residential tax, as well as gifts or local products from the municipalities they support.

The furusato nozei system is designed to encourage people to contribute to the development of rural areas and small towns, helping to balance economic disparities between urban and rural regions. It is a popular way for individuals to support their hometowns or other areas of personal significance while also benefiting from tax reductions.

外税 (gaizei) is a Japanese term that translates to "excluding tax" or "tax-excluded price" in English. It refers to the pricing method where the displayed or quoted price of a product or service does not include the applicable taxes, such as consumption tax (VAT).

When a price is listed as gaizei, the final amount the customer needs to pay will be higher than the displayed price, as the tax is added separately at the point of sale. This is in contrast to 内税 (uchizei), where the price includes all applicable taxes, and the amount displayed is the total amount the customer will pay.

Using gaizei pricing is common in some retail and service industries, and it is important for consumers to be aware that the final cost will include additional taxes not reflected in the initial price tag.