Tax Saving for Expats in Japan

This is a general tax saving method in Japan but most Japanese employees could not use this method. This is the difference between expats in Japan and employees in Japanese companies. Japanese employees called Salary-man in Japanese are forbidden to work additionally even in their private time.

Taxable incomes for individuals are classified into 10 taxable incomes. Here we talk about 2 of them, business income and Employment income.

Business income is an income derived from your business like independent enterprises of commerce, industry, fisheries, agriculture,
independent personal services, etc. You have to record your all transaction relating to your business on your accounting book. At the end of a year, you have to calculate your annual profit according to your accounting book. The amount of the annual profit is a business income. You need to note your business expense must be recognized in accordance with Japan individual income tax law.

The key of tax saving method is here to calculate a business profit. You need to get the minus amount of annual profit as a result of your business activities. You could get the situation by earning little and recognizing much expense. This means that you do not have to work hard on your business in Japan and that you have to comply Japan individual income tax law to account as much business expense as you could.

Your annual tax is calculated by the aggregated amount both business income and employment income, which is calculated from your salary and noted on your original record of withholding for employment income. Therefore, you could save your tax by keeping your small side business in Japan.

When you would like to talk about your situation and the possibility to save your tax, please feel free to email me.