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Japan Introduces 'My Number' Tax IDs

by Mary Swire,, Hong Kong

08 October 2015

The Japanese law establishing the "My Number" tax and social security identity (ID) system went into effect on October 5.

12-digit My Numbers will be issued over the next two months to all holders of a certificate of residence in Japan, including foreigners who have legally resided in Japan for more than three months and have an address in the country.

The ID number will need to be quoted on all documents related to tax and social security administration from January 2016. For example, Japanese residents will be asked to provide their My Number on application forms and other documents needed for national pensions, unemployment and medical insurance, child allowances, and other welfare benefits.

The numbers will also need to be provided on all income tax returns. For individuals, this will be necessary beginning with their 2016 tax returns, to be filed in February or March 2017. For companies, this will be necessary beginning with their tax declarations for years starting on or after January 2016.

Employers will also need to quote their employees' ID numbers on certificates of income and withholding tax for employment income earned from January 2016.

Only one ID Number will be issued to a particular company. Corporate ID numbers will not be issued to a company's branch office or other business establishment.

Information-sharing between central government agencies based on ID numbers will begin from January 2017, and at the local government level from July 2017. The Government will also link ID numbers to accounts held by an individual or company at financial institutions with effect from 2018.

While the new ID system is meant to aid the Government in improving tax and welfare service compliance, and simplify procedures for both individuals and companies, there have been concerns expressed in Japan over the Government's safekeeping of sensitive information.

TAGS: individuals | compliance | tax | business | pensions | value added tax (VAT) | tax compliance | public health | law | insurance | employees | corporation tax | legislation | withholding tax | social security | individual income tax | Japan

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