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Banks & Taxes in Japan

A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes

As a newcomer to a country as renowned for its high cost of living, managing your finances in Japan is one of the first things expats will want to learn to do upon arrival. On the whole, taxes in Japan are not outrageous, and many newbie expats will be happy to learn that they will be exempt from paying the residence tax during their first year in the country.

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Understanding bank accounts and the tax system in Japan is not terribly difficult. As a highly advanced, leading world economy, much of Japan’s financial system is similar to those found in Europe and North America. To open a bank account, the greatest hurdle expats will face is providing a residence card. It is not possible to open a bank account in Japan without Japanese residency. For foreigners planning to remain in the country longer than 90 days, this should not be a problem as they will be required to obtain a residence visa in order to live and work in Japan.

It may surprise you to learn that Japan is largely a cash-based society. Thankfully, ATMs are rife throughout the country, but be advised that many require a small withdrawal fee even if you have a Japanese bank account. If you ever find yourself in desperate need of cash, be sure to look for a 7/11 convenient store as these will always have an ATM.

The tax system, too, is similar to those found in other leading world economy countries. Perhaps one difference, though, is the residence tax. This tax is based on 6% of an individual’s income. This tax rate is often forgotten by expats because, unlike income tax, it is not automatically deducted from your paycheck. Instead, you will receive the bill in the mail and you will be expected to pay for it yourself (typically at your local tax office or nearby convenience store).

How to Open a Bank Account in Japan

Learning how to open a bank account in Japan as a non-resident is easy as long as you have all the necessary documents ready. At most banks, it is possible to simply walk in and ask to open an account without booking an appointment first. If you do not have a strong grasp of the Japanese language, this could be a bit of a challenge. Nearly all official forms in Japan, including those needed to open a bank account, will be written in Japanese. Major banks should have interpreters on staff. If not, InterNations GO! can help set you up with professionals who speak your language.

How Can I Open a Bank Account in Japan?

When you open a bank account in Japan, you will ask to open a futsū yokin (普通預金), which is a basic deposit account. The primary requirement when opening this account as a non-resident is to have a residence permit. You cannot open a bank account with a tourist visa. Depending on the bank, you may also be required to provide a hanko seal (personal stamp), but this will not always be the case.

During the process, expats may be surprised when asked if they are a part of a criminal organization. Do not be offended—this is a standard question and asked of everyone opening an account in Japan.

Requirements to Open a Bank Account as Non-Resident

Requirements to open a Japanese bank account will vary from bank to bank, but on average you will be asked to present:

  • your passport;
  • your Japanese visa;
  • your residence card (zariyu card);
  • Japanese address and phone number;
  • hanko seal / personal stamp.

A hanko seal is often used in Japan in place of a handwritten signature. You can create one in various kiosks throughout Japan.

Once you have submitted the required documents, you will be given a small passbook with your account name, account number, and the three-digit sort code for your local bank branch. You should receive your ATM card in the mail within ten days of opening your account.

It may be surprising to learn that Japanese society is very reliant on cash. Because of this, you will want to have cash on you at all times. Luckily, you can find ATMs fairly easily whether you are in the city or countryside.

Best Banks for Expats

Because Japan can sometimes make life hard for foreigners given the language barrier, there are two banks that are especially popular among the expat community. The first is Japan Post (JP Post). JP Post is popular because you do not have to have a Japanese phone number to open an account, nor do you need a hanko. Instead, you can list your work number and sign the papers with your written signature (a rarity in Japan as the hanko is required of most official documents).

The second bank popular among foreigners is Shinsei Bank. Just like JP Post, no Japanese phone number is required, but you will need a hanko. This bank is also popular because all forms are written in, and can be filled out in, English, Shinsei Banks are linked to most ATMs found in Japan’s 7-Eleven convenience stores, and they do not charge withdrawal fees for account holders.

Top Banks in Japan

If having a hanko or Japanese phone number is not an inconvenience for you, the following banks are some of the top-rated in Japan:

  • Japan Post Bank
  • Mitsubishi UFJ Financial Group
  • Mizuho Financial Group
  • Norinchukin Bank
  • Sumitomo Mitsui Financial Group

Top International Banks in Japan

In addition to national Japanese banks, the island nation is also home to many international banks:

  • Bank of America
  • Barclay’s
  • Citibank
  • JPMorgan Chase Bank
  • HSBC

Best Online Banks in Japan

Although Japan is a technically innovative society, banking is still largely traditional. Online banking is possible, but many transactions require residents to visit their bank in person.

You will find the best online banking options with the major bank branches:

  • SMBC
  • Seven Bank
  • Japan Post Bank
  • Shinsei Bank
  • Prestia

Some applications may only be available in Japanese. You may also find yourself being able to transfer and receive money through the popular instant messaging service Line.

Banking Fees and Minimum Deposit

The majority of bank accounts in Japan are no-fee bank accounts and do not require a minimum deposit. You may have to pay a fee each time you use an ATM, but on average the cost of having a Japanese bank account is very low.

Can I Open a Japanese Bank Account Online Japan as a Non-Resident?

Setting up a bank account in Japan from abroad is not possible as you will need to present your visa and residence card in-person to your chosen Japanese bank. Only those with a residence permit may open a bank account in Japan.

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What is the Tax System in Japan?

If you are wondering what the tax system is like in Japan, it will probably not surprise you to learn that it is fairly standard to what is found in other leading world economies. On the whole, taxes in Japan are paid based on income, property, and consumption. These are paid at the national, prefectural, and municipal levels.

Tax obligations will vary from individual to individual depending on your type of work, resident status, length of stay in Japan, and whether you are financially responsible for just yourself or other dependents.

The Tax System in Japan

There are six main types of taxes in Japan you will encounter while living in Japan:

  • Income tax: paid by residents on the national, prefectural, and municipal levels.
  • Enterprise tax: paid by self-employed individuals.
  • Property tax: municipal tax paid by those who own property.
  • Consumption tax: paid by consumers when buying goods or services. Typically 10%, but the price can vary slightly depending on the good or service.
  • Vehicle-related tax: paid annually by those who own a vehicle.
  • Liquor, tobacco, and gasoline tax: paid on the national, prefecture, and municipal level.

What is the Income Tax in Japan?

The income tax rate in Japan is based on the assessed tax liability of your previous year’s salary. This means the tax rate you pay in the current year is based on what you made the previous year.

Average Income Tax % Tax Brackets (JPY) Tax Brackets (USD)
5 0–1,950,000 0–17,900
10 1,950,000–3,300,000 17,900–30,4000
20 3,300,000–6,950,000 30,4000–64,000
23 6,950,000–9,000,000 64,000–82,900
33 9,000,000–18,000,000 82,900–165,900
40 18,000,000–40,000,000 165,000–368,600
45 40,000,000+ 368,600+

 

While Japanese natives are taxed based on their worldwide income, non-Japanese nationals working in Japan will only be taxed on what they make within the country. However, this status changes based on your resident status in Japan.

  • Non-resident: In Japan, a non-resident is classified as someone who has lived in the country for less than one year and does not have their primary address listed in Japan. People in this category will only pay taxes on what they make in Japan, not money from abroad.
  • Non-permanent resident: This is someone who has lived in Japan for one to five years, but does not have the intention of living in Japan permanently. This type of resident will pay Japanese income taxes, but they will not pay income taxes on money made abroad unless it is sent to Japan.
  • Permanent resident: A permanent resident is someone who has lived in Japan for over five years or enters the country with the intention of living there permanently. These residents will pay income taxes based on money made in Japan and abroad.

Tax Returns

It is uncommon in Japan for individuals to file their own tax returns. Typically, your company should do this for you. If they do, they should only need basic information from you to do so:

  • your address
  • your relationship status (single, married, divorced)
  • number of dependents

There are some exemptions for insurance costs, medical expenses, business operations, and self-employed people.

Residence Tax

This is a very important tax to be aware of in Japan as it is often the one that is most overlooked. Unless you work for a government agency, this tax will not be deducted automatically from your salary. Instead, you will receive it as a separate bill at your home from the local tax office. Like income tax, the resident tax is based on your previous year’s income and is typically only 6%. You will not have to pay this tax during your first year in Japan.

When you receive this bill in the mail, you can pay for it at a local convenience store (such as a 7/11 or Lawson’s). You can work with your local tax office to break the payment into installments or one large annual payment.

Again, this tax is the one that is most often overlooked by non-residents. However, it is important to stay up-to-date on the payments and not fall behind. Doing so could affect your visa renewal.

Taxes for Self-Employed People in Japan

Self-employed people in Japan are subject to residence and enterprise taxes. The residence tax rate will be based on your income and will be 6% just like traditionally employed people. The enterprise tax is based on the type of work you do as well as your income and where you live in Japan. It will typically be around 3–5%.

Do you want to relocate? If you have never moved abroad, the process will be overwhelming, and if you have, you know the burden that lies ahead. Whatever stage you are at, InterNations GO! can help you with a complete set of relocation services, such as home finding, school search, visa solutions, and even pet relocation. Our expert expat team is ready to get your relocation going, so why not jump-start your move abroad and contact us today? Best to start early!

Updated on: March 23, 2020
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