Withholding from income paid to non-residents or foreign corporations involves collection and payment to the tax authorities of income tax at a certain rate at the time of payment to non-residents or foreign corporations of income derived in Japan (called “domestic source income”).
Income tax withheld by a withholding agent shall in principle be paid by the 10th of the month following the month in which the income subject to withholding was paid.
(Persons obliged to withhold income tax and pay it to the government are called “withholding agents”.)
*Resident: an individual having a domicile in Japan or an individual who resides continuously in Japan for 1 year or more
*Domestic corporation: a legal person having a head office or principal place of business in Japan
*Non-resident: (an individual other than a resident) or a foreign corporation (a legal person other than a domestic corporation)
Tax rated for withholding are as follows: (include Revival special tax from January 1, 2013)
(1) Distribution of profit arising from partnership contract business
Recipient: Non-residents having a permanent establishment in Japan
Foreign corporations having a permanent establishment in Japan
Withholding tax rate: 20.42%
(2) Consideration for transfer of land, etc.
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 10.21%
(3) Interest, etc.
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 15.315%
*Regarding interest on transferred national bonds and transferred local bonds,
amounts corresponding to the period of ownership are non-taxable under certain
conditions.
(4) Distributions of revenue including the following:
a. Distribution of revenue from privately offered bond investment trusts
b. Distribution of revenue from corporate bond-like beneficiary rights in special
purpose trusts
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 15.315%
(5) Dividends, etc., other than those described in (4) above
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 7.147% (in the case of listed stocks, 15.315%)
or 20.42% (in the case of dividends other than those paid for listed stocks)
(6) Compensation money of benefits from installment deposits
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 15.315%
(7) Consideration for transfer of listed stocks kept in specific accounts for which
withholding in chosen
Recipient: Non-residents having a permanent establishment in Japan
Withholding tax rate: 7.147% (in the case of listed stocks, 15%, applicable from
January 1, 2014 to non-residents with permanent establishments and to all other
persons). Or 20% (in the case of dividends other than those paid for listed stocks)
(8) Monetary award from deposits offering awards
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 15.315%
(9) Profit from redemption of discount bonds
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 18.378% (16.336% for certain discount bonds)
*Withholding is exempted for short-term bonds that are transferred and entered
together with all other short-term bonds of the same brand upon issuance.
(10) Domestic source income other than income described (1) through (9) above
Recipient: Non-residents, Foreign corporations
Withholding tax rate: 20.42%
|
Taxation in Japn 2013