Even among foreigners living in Japan, not everyone remains in Japan continuously. Some may travel abroad for business. This article explains how Japan’s income tax rules apply to foreigners who frequently leave and return to Japan within a year.
Under Japan’s income tax laws, individuals are classified into three taxpayer categories. The taxable income range and calculation methods vary depending on the category. For more information on these categories and income ranges, refer to this article.
According to Japan’s Income Tax Act, a “resident” is defined as “an individual who has a domicile in Japan or has had a residence in Japan continuously for at least one year.” Therefore, determining which taxpayer category applies becomes an important issue when a foreigner frequently travels abroad for business.
Q&A
I am a foreigner working for the Japanese branch of a UK-based company. I have lived in Japan with my family for seven years. I frequently travel abroad for business and spend more than half the year working overseas. During this time, my family continues to live in a rented apartment in Japan. In this case, which taxpayer category do I fall under?
If, during your time abroad, you leave your spouse or other family members in Japan, maintain a residence where you plan to live upon returning, and it is clear that your purpose for going abroad is temporary, you are deemed to continue having a residence in Japan and are classified as a resident.
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