Mention residents tax to any foreigner living in Japan and chances are, you aren’t likely to win any favorable responses. Otherwise known as city tax, ward tax or inhabitants tax to name just a few aliases, this is probably one of the most dreaded and least understood of all the taxes in Japan. It is also one of the most expensive.
Commonly associated with money mysteriously disappearing from people’s bank accounts, nasty letters threatening to seize their possessions or early morning knocks at the door from local City Office representatives, there aren’t many people who haven’t experienced or heard a horror story associated with its lack of, or late payment.
Although foreigners aren’t the only ones to blame, according to Hama Masahito, Manager of the Residents Tax Payment Section of Shinjuku City Office, it does seem some people need to do some explaining, and in particular he’d like to hear from the teaching staff of one of Japan’s leading English chain schools.
“For every 100 of their staff, 80 go home without paying their residents tax,” he said. Therefore in a bid to collect this tax due before they go home, Shinjuku Ward Office has implemented a seemingly Draconian policy.
“It has been decided that if we know an employee of that school hasn’t paid their residents tax, we will send them a demand slip for payment by the end of the same month and then 20 days after that, if they still haven’t paid, we will take the money from their bank accounts.”
For many of us, before coming to Japan having money taken from our personal bank account wasn’t something we thought could happen and one would question whether or not this is actually legal. The answer is YES.
According to the National Tax Collection Law, Chapter 5, Article 47, local governments are allowed to seize property, possessions, money or any articles to the equal worth of the overdue tax, anytime 20 days after the final demands cut off date has passed. They are also entitled to obtain any information necessary in order to do this.
Ms. Sakuma of Minato City Office’s Residents Tax Payment Section explained that first they will research someone’s bank account by sending letters to all the banks, to find out if that person has any money.
According to the law, the City Office is entitled to any information that may assist in the collection of this debt. They then seize the money before notifying the resident by letter afterward.
Occasionally there are cases where there is no money in the resident’s bank account and so in this case the City Office begins by investigating property or other assets which may be of value.
In the event that a foreigner does return home without paying their tax there isn’t much that the City Office can do. Usually they will send a letter to that resident’s address in their home country and hope that, the person is honest enough to pay their bill. However, this isn’t usually the case.
That said, unlike the urban myth might lead you to believe, they can’t do a tax check at the airport.
“Sometimes at the Immigration Office you will have to submit a certificate of taxation and they will check for these kinds of things, but otherwise in your ordinary daily life you won’t be disadvantaged in any way, except if you want to take out a home or business loan. In this case you will be required to submit a certificate of taxation to the bank,” said Masahito.
Unlike in many other cases in Japan where claiming “I don’t understand Japanese” or “I didn’t know” might work, you’ll probably find it falling on deaf ears in the case of residents tax.
“I’m certain there is nobody living in Japan who does not know about resident’s tax,” Masahito said.
On this point, I’m sure many of us disagree. With no information printed in English on payment slips, a newcomer to Japan might be forgiven for accidentally throwing these in the trash.
Aware of this situation Minato Ward began including an English explanation in recent years. Shinjuku Ward, however, still seems far away from any such thing.
“We considered doing this but systematically it’s very difficult,” said Ms. Nagai from the Tax Department of the Shinjuku City Office. “If we do this we have to make it in other languages such as Chinese, Korean, French and Spanish as well. It’s just too complicated to identify who is from where and then send them a notice in their native language,” she said.
A nice excuse, but a little difficult to believe since all foreigners living in the ward must register on the first floor of the same building.
After much consideration Ms. Yoshida and Ms. Nagai finally admitted, “there is definitely room for improvement.”
On both sides it seems.