On November 30, 2011, the Japan Diet approved a bill for taking “Special Measures to secure the financial resources for reconstruction after the Great East Japan Earthquake”. As a result, there will be an increase in the income tax rate effected by the “Special Reconstruction Income Tax” and regulation will be put in force from 2013/1/1 to 2037/12/31 for 25 years whereby a tax rate of 2.1% will be imposed on the standard National Income tax.
Taxable person
National Income Tax payers are supposed to pay the “Special Reconstruction Income Tax”.
Object of taxation
The Special Reconstruction Income Tax will be imposed on incomes from 2013 to 2037. Regarding salaried workers, the tax will be collected by the withholding tax from 2013.
Base of Taxation
The Special Reconstruction Income is calculated based upon income tax.
The amount of tax = Income tax X 2.1%
Note: Residents whose foreign tax credit exceeds income tax can deduct the remaining foreign tax credit from the Special Reconstruction Tax.
Base income tax to calculate the Special Reconstruction Income Tax
| Income tax | ||
| Resident | Permanet resident | Income tax on worldwide income |
| Non-permanent residen | Income ax on domestic source income and foreign source income
which is sent to Japan |
|
| Non-resident | Income tax on domestic source income | |
Filing an income tax return
Regarding income from 2013 to 2047, the income tax return has to be filed together with the Special Reconstruction Income tax return.
Payment
Tax payers who file the above tax returns have to pay the income tax together with the Special Reconstruction Income tax by Mach 15.
Withholding tax
Withholding agents have to collect the withholding tax including the Special Reconstruction Income tax. 2.1% of the tax rate is imposed on the existing withholding tax.
The total tax rate
The total tax rate ＝ Income tax rate(%) × 102.1％
Ex 1)
Income tax rate(%) |
５ | ７ | 10 | 15 | 16 | 18 | 20 |
| Total tax rate(%) （Income tax rate×102.1％） | 5.105 | 7.147 | 10.21 | 15.315 | 16.336 | 18.378 | 20.42 |
Ex 2)
Interest income on deposit 20% + 15% × 2.1% (15% is income tax) + 5% (5% is local tax) = 20.315%
Ex 3)
Accountant fee 10% +10% × 2.1% = 10.21%
By Certified Public Accountant & Tax Accountant, Koji Takahashi
Tokyo & Yokohama
