payroll-guides
Published on 02 Sep 2024
OS HRS takes care of your multi-country payroll with local regulatory expertise. From Japan, across Asia Pacific and beyond, we are the payroll partner of global leaders. Not sure where to start when it comes to multi-country payroll? Here’s our quick payroll guide for your Japan business operations.
Currency | JPY - Japanese Yen |
Payroll cycle | Monthly, 13th Summer bonus in June, 14th Winter bonus in December |
Employer taxes | 16.62% - 26.74% |
Minimum wage | ¥893 to ¥1,113 per hour depending on the prefecture. |
Working hours | 40 hours a week, 8 hours a day |
Firstly, how payroll is setup in Japan depends on what corporate structure you have in place. Japan has four types of corporate structures, which are:
Godo-Kaisha (合同会社): A limited liability company
Goshi-Kaisha (合資会社): A limited partnership company
Gomei-Kaisha (合名会社): A general partnership company
Kabushiki-Kaisha (株式会社): The Japanese version of incorporation
Once your corporate structure has been determined, companies need to go through various legal procedures in order to set up their Japan payroll. Some legal items that must be addressed are:
A Japanese resident must be appointed as either the incorporator or managing member.
Paid-up capital is to be deposited into the company's bank account before it is incorporated into the operating entity.
Include details of employees and other company details in the Articles of Incorporation.
Subsidiary name(s) are to be submitted to the Trade Registrar. If it is in English, the name should be submitted as is but contain its Japanese kanji translation.
The Legal Affairs Department must have all the certified documents for the incorporated entity.
After the above, you will be ready to hire employees, which means you will need to set up payroll process. You will need to register with the following Japanese government agencies:
Labor Standards Inspection Office
Social Insurance Office
National Tax Agency
What do you as an employer need to make in employer contributions?
9.15% | Pension (salaries up to ¥650,000 per month) |
5% – 6.57% | Varies by region (salaries up to ¥1,390,000 per month). Higher rates apply for those aged 40-65. |
0.91% | Nursing Care Insurance (salaries up to ¥1,390,000 per month) |
0.95% | Unemployment Insurance |
0.25% – 8.8% | Work Injury |
~0.36%* | Family Allowance |
16.62% – 26.74% | Total Employment Cost |
* Approximate figure, therefore, not included in employment cost
What do your employees need to set aside in contributions?
9.15% | Pension |
5.00% | Varies by region (salaries up to ¥1,390,000 per month). Higher rates apply for those aged 40-65. |
0.60% | Unemployment Insurance |
0.91% | Nursing Care Insurance (salaries up to ¥1,390,000 per month) |
14.67% | Total Employee Cost |
What are the income tax rates?
5.00% | Up to ¥1.95M |
10.00% | ¥1.95M – 3.3M |
20.00% | ¥3.3M – 6.95M |
23.00% | ¥6.95M – 9M |
33.00% | ¥9M – 18M |
40.00% | ¥18M – 40M |
45.00% | Over ¥40M |
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Reach out to OS HRS for a discovery call today!
Last updated September 2024
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