Japanese Business Glossary

医療費控除 (iryohi kojo), medical deduction, is a tax deduction in Japan that allows individuals to deduct certain medical expenses from their taxable income. This deduction can be claimed if the total medical expenses exceed a specific threshold within a given year. The threshold for medical expenses is typically 100,000 yen or 5% of the individual's total income if the income is below 2 million yen.

Eligible expenses include costs for treatment and care provided by medical institutions, prescribed medications, transportation costs for hospital visits, and specific treatments such as dental care, including orthodontics for medical reasons, and laser eye surgery (LASIK). Non-eligible expenses include cosmetic procedures, general health check-ups unless they lead to treatment for a detected illness, and costs associated with lifestyle or preventive measures like gym memberships or dietary supplements. Transportation costs are covered if they involve public transport or taxis when public transport is not feasible, but not for personal vehicle use.

To claim the medical expense deduction, individuals must file a tax return and submit a detailed statement of medical expenses. They must also keep all receipts for five years in case the tax authorities request verification. The process can be facilitated using the My Number Card, which simplifies record-keeping and submission.

扶養控除申告書 (fuyou koujo shinkokusho), Declaration of Dependent Deduction, officially known as the "給与所得者の扶養控除等（異動）申告書" (kyūyo shotokusha no fuyou koujo-to [ido] shinkokusho), is a document that employees in Japan submit to their employers for year-end tax adjustment purposes. This form is necessary for claiming income tax deductions related to dependent exemptions.

The form allows employees to declare their dependents, such as spouses, children, or other family members, who qualify for tax deductions. It includes details about each dependent, such as their relationship to the employee and their income levels. The main deductions that can be declared through this form include the spousal deduction (配偶者控除 = haiguusha koujo) and the dependent deduction (扶養控除= fuyou koujo).

The spousal deduction applies if the spouse's annual income is 1.03 million yen or less, and the taxpayer's income is below specific thresholds. The dependent deduction applies to dependents under certain conditions, such as age and income criteria, and can significantly reduce the employee's taxable income.

Employees typically fill out and submit this form during the year-end adjustment period (年末調整 = nenmatsu chousei), which occurs from October to January. Proper submission ensures accurate tax calculations and helps employees benefit from applicable tax reductions.

配偶者控除 (haigūsha kojo) is the spousal tax deduction in Japan. This tax benefit allows a taxpayer to reduce their taxable income if they have a spouse who earns below a certain income threshold.

The purpose of the spousal tax deduction is to provide financial relief to households where one spouse is the primary earner and the other has little or no income. To qualify for this deduction, the spouse's annual income must be below a specified amount, which is subject to change by tax regulations. The primary earner can then apply this deduction when filing their annual tax return, effectively lowering their overall tax liability.

The spousal tax deduction helps support families by reducing the tax burden on single-income households, making it easier for them to manage their finances. This deduction is a significant aspect of Japan's tax system, aiming to recognize and support the economic contribution of non-working or low-earning spouses.

扶養控除申告書 (fuyo kojo shinkokusho) is the Declaration of Dependent Deductions form in Japan. This document is used by employees to declare their dependents in order to qualify for tax deductions related to those dependents.

By submitting this form, employees can reduce their taxable income, thereby lowering the amount of income tax withheld from their salary. Dependents typically include children, elderly parents, or other family members who rely on the taxpayer for financial support.

The form must be submitted to the employer, who will then adjust the employee's tax withholdings accordingly. This form is usually submitted at the beginning of the tax year or when there is a change in the number of dependents. Properly completing and submitting the form ensures that the employee receives the appropriate tax benefits, contributing to more accurate and beneficial tax withholding throughout the year.

免税事業者 (menzei jigyosha) refers to a tax-exempt business or individual in Japan. These entities are exempt from the obligation to collect and remit consumption tax (similar to VAT or sales tax) on their sales.

Typically, small businesses and freelancers with annual taxable sales below a certain threshold qualify as tax-exempt businesses. This threshold is currently set at 10 million yen, meaning businesses or individuals with taxable sales below this amount in a base period (usually the previous fiscal year) are not required to charge consumption tax on their goods or services.

Being a tax-exempt business simplifies tax reporting and reduces administrative burdens, as these businesses do not need to account for consumption tax in their transactions. However, they also cannot claim input tax credits for the consumption tax paid on their purchases.

This status can be advantageous for small businesses and startups by lowering their tax liabilities and easing their entry into the market. Understanding the requirements and benefits of being a tax exempt business is crucial for effective financial planning and compliance with Japanese tax regulations.

寡婦 (kafu) refers to a widow in Japan, a woman whose spouse has passed away. In the context of Japanese tax law, a widow also encompasses certain tax benefits and deductions available to widows, aiming to provide financial support and ease the tax burden on single-parent households.

A woman qualifies for the widow deduction if she meets specific criteria, such as not being remarried and having dependent children or meeting other requirements set by tax regulations. The deduction reduces the widow's taxable income, thereby lowering the amount of tax she owes. There is also a special category called "特別寡婦" (tokubetsu kafu), or special widow, which offers an even higher deduction for those who meet additional criteria, such as having a minor dependent child and a lower annual income.

These tax deductions for widows recognize the financial challenges faced by single-parent families and provide some relief by reducing their overall tax liability. Properly claiming this deduction requires understanding the eligibility criteria and ensuring accurate documentation when filing tax returns.