朝日税理士法人

VI. Employee Withholding Taxes and Payroll Taxes

Ⅵ.Employee Withholding Taxes and Payroll Taxes

 

■Employee Withholding Taxes

Salaries, wages or similar remuneration paid periodically to employees as well as bonuses or similar remuneration paid to employees are subject to withholding income taxes. The taxes are calculated based on the “withholding tax table for salaries, wages, etc.” and the “withholding tax table for bonuses”.

 

The employee withholding income tax is normally paid on or before the 10th of the following month. However companies with less than 10 employees can file a request (“Noki No Tokurei”) with tax office and pay the withholding tax only twice a year.

 

■Payroll – Other Deductions

Other deductions are also made from the employees’ salaries or other remuneration. There are basically two kinds of payroll deductions:

 

<Social Insurance >

  • Health Insurance and Nursing Care Insurance – insurance that cover medical and nursing care expenses incurred by workers. The insurance premium is shared equally by the employee and the employer.
  • Employees’ Pension Insurance – insurance that provides retirement benefits to workers in their old age, or benefits in case of death or disability. The insurance premium is shared equally by the employee and the employer.

 

<Labor Insurance>

  • Workers Accident Compensation Insurance that covers any illness or accident incurred by workers as a result of their work or while commuting to or from work. The employer bears the burden of paying the insurance premium.
  • Employment Insurance provides assistance to workers that become unemployed and helps to maintain stable employment such as providing financial aid and subsidies. The insurance premium is borne by the employer and the employees.

 

Social insurance premiums are paid monthly and labor insurance premiums are paid once a year in advance.

 

The company usually pays insurance premiums by withholding the portion of the premiums payable by employees from their salaries and other remunerations, and paying these together with the portion of the premiums payable by the company to the relevant authorities.