Japan Payroll Services

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Japan Payroll

Bradford Jacobs’ expertise provides complete answers for companies which are including Japan in their expansion plans. We know successful international expansion depends on making the right moves from day one. This is crucial for companies building their international profile in Japan. Compliance with Japanese payroll regulations is vital for your company’s smooth and stress-free integration into the economy.

At Bradford Jacobs, we make business expansion easy, thanks to our Professional Employer Organization (PEO) and Employer of Record (EOR) platforms. We navigate the administration of the Japanese payroll system for you. As part of our service, we make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities.

From the first steps of setting up the operation, our payroll specialists guide you through the complex layers of Japanese taxation laws. These involve registering for withholding tax, social insurance, labor insurance, plus federal, local, corporate, enterprise and inhabitants’ taxes.

This involves at least 30 tax payments a year, nationally and at prefecture and municipal levels for all these categories, compared with an average of 10 for the USA and member nations of the Organization for Economic Cooperation and Development.

Bradford Jacobs will process every requirement of the relevant authorities – including the National Tax Agency (Kokuzei-cho, NTA) and the relevant social insurance systems (Shakai Hoken), covering health insurance, employee pensions, unemployment insurance and accident compensation.

Our teams step in from day one and you enjoy the benefits. We supply customized payroll to meet the specific requirements of complying with Japanese regulations.

What Japanese Payroll Options are available for Companies?

Payroll OptionInformation
Remote payrollThis option allows businesses to operate under a single payroll system, by adding employees in Japan to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
Internal payrollYou may operate payroll from your subsidiary, especially if you are committed to growing your company’s presence in Japan. However, this does require hiring dedicated HR staff who understand Japanese employment and compliance laws.
Japan payroll processing companyIf you are considering outsourcing, then working with a Japanese payroll company will help in processing your payroll – but not when it comes to compliance.
Japan payroll outsourcingHowever, there is another option available which solves both concerns – by working with Bradford Jacobs. We can handle both your payroll and compliance for all your employees in Japan. We take the administrative stress off your shoulders so you can focus on what you do best

Japanese Payroll Services

Establishing payroll in Japan needs a total understanding of the employment law and many levels of taxation regulations. These apply to personal and withholding tax, social insurance, labor insurance, plus federal, prefecture, municipal, corporate, consumption, enterprise, and inhabitants’ taxes.

Outsourcing payroll services in Japan will deal with the following:

  • Remitting withheld taxes to the National Tax Agency (Kokuzei-cho, NTA)
  • Remitting social insurance deductions to the relevant social insurance systems (Shakai Hoken)
  • Filing returns for the tax year, which runs from January 1 till December 31
  • Local employers withhold national income tax monthly. Provisional payments may be necessary in July and November if the previous year’s tax liability exceeded JPY 150,000 (US$1,360). If tax is not withheld, registered tax residents must pay instalments in June, August, October, and January of the following year
  • Providing employees with an annual certificate of deductions (Gensen) in December each year
  • Reconcile national and local taxes to assess for refunds or extra payments
  • Applying for employees’ special expatriation status (if applicable)
  • Calculating employees’ monthly salary and sending their pay slips
  • Researching for any available tax incentives
  • Submitting employees’ or employers’ wage tax returns and social insurance forms
  • Creating and submitting your company’s annual accounts and year-end statements
  • Creating payment schedules for wage tax, national insurance, and net wages
  • Ensuring accurate personal income tax returns are filed for you and your employees

What is required to set up Japan Payroll?

Before a company can operate payroll in Japan, they must complete various legal procedures. In the case of a foreign-owned limited liability subsidiary (Godo Kaisha, GK), set up under the New Companies Act 2006, these include:

  • Appoint a Japanese resident, local or foreign, as incorporator and managing member
  • Deposit paid-up capital into the incorporator’s bank account, before the incorporation of the company
  • Articles of Incorporation notarized in Japanese. With dual language Articles, only the Japanese version is legally valid
  • Names and addresses of company members, office address, details of capital and shares’ distribution must be included in the Articles of Incorporation
  • Company name of a subsidiary must be submitted to the Trade Register, can be in English but must include the Japanese kanji characters representing Godo Kaisha in the name
  • All certified documents submitted to the Legal Affairs Department of the Ministry of Finance

Time limits apply to notifications to the relevant District Tax Office, which must be informed of incorporation within two months; of implementing payroll within one month and obtain tax return forms within three months.

To hire personnel and operate payroll the incorporated company must:

  • Register with the Labor Standards Inspection Office
  • Register with the Social Insurance Office to remit deductions to various relevant social insurance systems (Shakai Hoken)
  • Register with the National Tax Agency (Kokuzei-cho, NTA)
  • Apply to the National Tax Agency (NTA)