JAPAN Law and Practice Contributed by: Junichi Ueda, Etsuko Hara, Nobuto Shirane, Takahiro Hayase, Yutaka Shimoo and Miki Goto, Anderson Mori & Tomotsune
Trade Union Under the Constitution, workers have the right to: • form and join unions; • bargain collectively through the unions to which they belong; and • engage in other concerted activities for the pur - pose of collective bargaining or other mutual aid or protection (Article 28 of the Constitution). A union may represent its members’ interests in bar - gaining with their employer(s) in relation to their work - ing conditions or other treatment of those members. A union does not need authorisation from administrative agencies to represent its members in bargaining with their employer(s). If a union requests a collective bargaining session, the employer may not reject that request without a reasonable cause (Article 7, item 2 of the LUA). Employees are subject to income tax and local inhab - itant tax in relation to their salary, and their employers must pay the taxes to national and local governments. For the purpose of Japanese income tax, an individual (including an employee) is categorised as: • a permanent resident; • a non-permanent resident; or • a non-resident. A resident is defined as any individual who has their residence ( jusho ) in Japan or who has had their tem - porary residence ( kyosho ) in Japan for more than one year. A permanent resident is defined as a resident other than a non-permanent resident (as defined below) and is subject to income tax with regard to all of their income (including salary, hereinafter the same in this section) accrued inside and outside Japan. On the other hand, a non-permanent resident – who is defined as any individual who is a resident of Japan, 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
but who is not a Japanese national and who has had residence in Japan or temporary residence in Japan for five years or fewer in total during the past ten years – is subject to income tax only with regard to income other than foreign-sourced income and any amount of foreign-sourced income that is paid in or transmitted to Japan. A non-resident (ie, any individual other than any type of resident) is subject to income tax only with regard to domestic (Japan)-sourced income. This type of income includes salaries received for work or personal services carried out in Japan or, if outside Japan, by a person acting as an officer of a Japanese corporation. For the employment earnings of a permanent resident or a non-permanent resident who has submitted a certain application and whose individual income does not exceed JPY20 million per year, such an employee will only be subject to withholding tax and need not file their own tax return. Instead, the employer will be responsible for the calculation and payment of the employees’ taxes. This system, especially the year- end recalculation procedure of the system, is called the “year-end adjustment system” ( nenmatsu chousei ) of tax payment. The income tax rates are progres - sive and the maximum rate is 45% (excluding local income tax). In addition, reconstruction special income tax will be imposed on income tax at a rate of 2.1% from 2013 to 2047 (from 2027, a rate of 1% will be replaced for defence special income tax). Please see the following progressive income tax rates (including reconstruction special income tax): • 5.105% (for the portion of taxable income of JPY1.95 million or less); • 10.21% (for the portion of taxable income of more than JPY1.95 million to less than JPY3.3 million); • 20.42% (for the portion of taxable income of JPY3.3 million to less than JPY6.95 million); • 23.483% (for the portion of taxable income of JPY6.95 million to less than JPY9 million); • 33.693% (for the portion of taxable income of JPY9 million to less than JPY18 million); • 40.84% (for the portion of taxable income of JPY18 million to less than JPY40 million); and
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