Payroll Guides

Payroll Guide: Japan

Published on 08 Mar 2023

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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.

Overview of payroll in Japan

Currency  

JPY - Japanese Yen

Payroll cycle 

Monthly, 13th Summer bonus in June, 14th Winter bonus in December 

Employer taxes  

14.94% - 24.37% 

Minimum wage  

¥714 to ¥932 per hour

Working hours  

40 hours a week, 8 hours a day 

What are the steps to set up payroll in Japan?

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 need to know about Japan Payroll?

Employer Contributions in Japan

What do you as an employer need to make in employer contributions?

9.15%

Pension (salaries up to ¥650,000 per month)

4.92% – 6.49%

Varies by region (salaries up to ¥1,390,000 per month). Higher rates apply for those aged 40-65.

0.30%

Unemployment Insurance

0.25% – 8.8%

Work Injury

~0.36%*

Family Allowance

14.98% – 24.43%

Total Employment Cost

* approximate figure, therefore, not included in employment cost

Employee Contributions in Japan

What do your employees need to set aside in contributions?

9.15%

Pension

4.92%

Varies by region (salaries up to ¥1,390,000 per month). Higher rates apply for those aged 40-65.

0.30%

Unemployment Insurance

14.37%

Total Employee Cost

Employee Income Taxes in Japan

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

Why trust OS HRS with your Japan payroll?

Integrate your multi-country payroll processes

Automate your multi-country payroll across Asia Pacific, and beyond

Dedicated multi-country payroll compliance

Reach out to OS HRS for a discovery call today!

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Last updated March 2023

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