Japanese Business Glossary

The term 勤労学生控除 (kinro gakusei kojo) refers to the working student deduction in Japan. This tax deduction is available for students who are working while pursuing their studies. It allows eligible students to reduce their taxable income, thereby lowering the amount of income tax they need to pay.

To qualify for this deduction, students must meet certain criteria. They must be enrolled in an educational institution, such as a university, high school, or vocational school. Additionally, their earned income must primarily come from employment rather than other sources like investments. There is also a limit on the amount of income that can be earned to be eligible for this deduction.

The purpose of the working student deduction is to alleviate the financial burden on working students, enabling them to balance their educational and employment commitments without facing excessive tax liabilities. This policy acknowledges the efforts of students who work to support themselves while continuing their education.

住宅ローン控除 (jūtaku ron kojo) refers to mortgage loan deduction in Japan, a tax benefit designed to reduce the financial burden on individuals who take out loans to purchase or renovate their homes. This deduction allows eligible homeowners to reduce their taxable income based on the amount of interest paid on their mortgage.

To qualify for the mortgage loan deduction, the loan must be used to purchase a primary residence, and the property must meet certain size and quality standards. Additionally, the homeowner must live in the property as their primary residence within a specified period after purchase. The deduction applies for a set number of years, often up to 10 or more, depending on the loan's start date and the specifics of the property.

The amount of the deduction is typically calculated as a percentage of the remaining mortgage balance at the end of each year, up to a certain limit. This helps reduce the annual tax liability for homeowners, making home ownership more affordable and attractive. The goal of the mortgage loan deduction is to stimulate the housing market by encouraging people to buy homes and support economic stability through increased home ownership.

退職金 (taishokukin) refers to a retirement allowance or severance pay in Japan. This is a lump-sum payment given to employees upon their retirement or departure from a company. The purpose of retirement allowance is to provide financial support to employees as they transition out of the workforce, acknowledging their years of service and contributions to the company.

The amount of severance pay can vary significantly based on factors such as the length of employment, the employee's position, and the company's specific policies. In many cases, companies have structured retirement plans that outline how the amount is calculated. These plans may consider the employee's final salary, years of service, and other relevant factors.

Receiving a retirement payout can have tax implications, as it is often subject to preferential tax treatment in Japan. The tax rate on a retirement payout is typically lower than regular income tax, reflecting its role in supporting retirees. This preferential treatment helps ensure that retirees receive a larger portion of their severance pay, aiding their financial security during retirement.

Overall, retirement allowance is an important component of the Japanese employment system, offering a measure of financial stability and recognition to employees as they conclude their careers.

基礎控除 (kiso kojo), basic deduction, refers to the "basic deduction" or "basic allowance" in the context of the Japanese tax system. It is a standard deduction that taxpayers in Japan can apply to reduce their taxable income. The basic deduction is intended to provide a tax benefit to all taxpayers by reducing the amount of income that is subject to taxation, thus lowering the overall tax burden.

As of recent updates, the amount of the basic deduction can vary based on different factors, such as the taxpayer's income level and filing status. It is one of several deductions available in the Japanese tax system, which also includes other specific deductions for dependents, medical expenses, social insurance premiums, and so on. Currently, the amount is set at 480,000 yen for individuals whose total income is under 24 million yen.

For accurate and up-to-date information on the current amount and rules regarding the basic deduction in Japan, it is recommended to consult the National Tax Agency of Japan or a tax professional.

非課税 (hikazei) refers to "tax-exempt" or "non-taxable" in Japan. This term is used to describe income, goods, services, or transactions that are not subject to taxation under Japanese law. Various types of income and transactions are designated as tax excempt to provide financial relief, promote certain activities, or support specific groups of people.

For individuals, common examples of tax exempt income include certain social security benefits, scholarships, and specific types of insurance payouts. For businesses, some transactions such as exports and certain financial services may be considered tax exempt. Goods and services deemed essential, such as basic food items or medical supplies, can also fall under the tax exempt category to make them more affordable.

The designation of tax exemption is crucial for both taxpayers and tax authorities, as it determines which items and income are excluded from the tax base.

By providing tax exemptions on specific income and transactions, the Japanese government aims to support economic stability, encourage beneficial activities, and provide financial relief to those in need.

社会保険料控除 (shakai hokenryo kojo) refers to the "Social Insurance Premium Deduction" in Japan. This tax deduction allows individuals to reduce their taxable income by the amount they have paid for social insurance premiums during the year.

Social insurance premiums include contributions to various mandatory insurance programs such as health insurance, pension insurance, unemployment insurance, and long-term care insurance. These contributions are typically deducted directly from an employee's salary by their employer.

To claim the social insurance deduction, taxpayers must accurately report the total amount of social insurance premiums they have paid over the year on their tax return. This deduction helps lower their overall taxable income, thereby reducing the amount of income tax they owe. For self-employed individuals and others who pay their insurance premiums directly, proper documentation and proof of payment are required to claim this deduction.

The purpose of this deduction is to acknowledge the financial burden of social insurance contributions and provide tax relief to individuals. By allowing these deductions, the Japanese tax system ensures that taxpayers are not doubly burdened by both high insurance costs and high taxes, promoting a fairer and more equitable taxation system.