Japanese Business Glossary

住宅ローン控除 (jūtaku ron kojo) refers to mortgage loan deduction in Japan, a tax benefit designed to reduce the financial burden on individuals who take out loans to purchase or renovate their homes. This deduction allows eligible homeowners to reduce their taxable income based on the amount of interest paid on their mortgage.

To qualify for the mortgage loan deduction, the loan must be used to purchase a primary residence, and the property must meet certain size and quality standards. Additionally, the homeowner must live in the property as their primary residence within a specified period after purchase. The deduction applies for a set number of years, often up to 10 or more, depending on the loan's start date and the specifics of the property.

The amount of the deduction is typically calculated as a percentage of the remaining mortgage balance at the end of each year, up to a certain limit. This helps reduce the annual tax liability for homeowners, making home ownership more affordable and attractive. The goal of the mortgage loan deduction is to stimulate the housing market by encouraging people to buy homes and support economic stability through increased home ownership.

退職金 (taishokukin) refers to a retirement allowance or severance pay in Japan. This is a lump-sum payment given to employees upon their retirement or departure from a company. The purpose of retirement allowance is to provide financial support to employees as they transition out of the workforce, acknowledging their years of service and contributions to the company.

The amount of severance pay can vary significantly based on factors such as the length of employment, the employee's position, and the company's specific policies. In many cases, companies have structured retirement plans that outline how the amount is calculated. These plans may consider the employee's final salary, years of service, and other relevant factors.

Receiving a retirement payout can have tax implications, as it is often subject to preferential tax treatment in Japan. The tax rate on a retirement payout is typically lower than regular income tax, reflecting its role in supporting retirees. This preferential treatment helps ensure that retirees receive a larger portion of their severance pay, aiding their financial security during retirement.

Overall, retirement allowance is an important component of the Japanese employment system, offering a measure of financial stability and recognition to employees as they conclude their careers.

譲渡所得 (joto-shotoku), capital gains, refers to capital gains or transfer income in Japanese tax terminology. This type of income arises when an individual sells or transfers ownership of certain assets, such as real estate, stocks, or other properties, and makes a profit from the sale.

Capital gains are subject to specific tax regulations in Japan. The amount of tax owed depends on various factors, including the type of asset, the holding period, and whether any special exemptions or deductions apply.

For instance, when selling real estate, the holding period can significantly impact the tax rate. Properties held for more than five years generally qualify for a lower tax rate compared to those held for a shorter period.

It's important for individuals and businesses to understand the specific rules and potential tax liabilities associated with capital gains to ensure compliance and optimize their tax obligations.

基礎控除 (kiso kojo), basic deduction, refers to the "basic deduction" or "basic allowance" in the context of the Japanese tax system. It is a standard deduction that taxpayers in Japan can apply to reduce their taxable income. The basic deduction is intended to provide a tax benefit to all taxpayers by reducing the amount of income that is subject to taxation, thus lowering the overall tax burden.

As of recent updates, the amount of the basic deduction can vary based on different factors, such as the taxpayer's income level and filing status. It is one of several deductions available in the Japanese tax system, which also includes other specific deductions for dependents, medical expenses, social insurance premiums, and so on. Currently, the amount is set at 480,000 yen for individuals whose total income is under 24 million yen.

For accurate and up-to-date information on the current amount and rules regarding the basic deduction in Japan, it is recommended to consult the National Tax Agency of Japan or a tax professional.

納税証明書 (nozei shomeisho) is a Japanese term that means Tax Payment Certificate in English. This document is issued by tax authorities in Japan and serves as proof that an individual or business has paid their taxes. It typically includes details such as the taxpayer's name, the amount of tax paid, and the period for which the tax was paid.

Tax Payment Certificates are often required for various administrative procedures, such as applying for loans, certain government services, or visas, to demonstrate financial responsibility and compliance with tax obligations.

インボイス方式 (inboisu hoshiki), also known as the Invoice System, is a method used in Japan for managing value-added tax (VAT) transactions between businesses. This system requires businesses to issue and retain invoices that include specific details about the transaction, such as the seller's and buyer's information, the date of the transaction, a description of the goods or services, the amount, and the applicable VAT.

The primary purpose of the invoice system is to ensure accurate VAT reporting and to prevent tax evasion. By maintaining detailed invoices, businesses can substantiate their VAT claims and ensure they are correctly reporting their tax obligations. This system facilitates better tracking of taxable transactions and enhances transparency in business dealings.

Under the invoice system, businesses can also use these invoices to claim VAT deductions for the taxes they have paid on their purchases. To be eligible for these deductions, the invoices must comply with the requirements set by tax authorities, including the proper documentation of VAT amounts. This encourages businesses to keep meticulous records and promotes fair tax practices.