It says “FAQs relating to covid-19 for the time being which is for
tax filing and payment procedures.”This FAQ is based on tax rule as of 1st October 2020.

Updated on 23th October 2020.

Q11) The case of persons who can’t depart from Japan [updated on 23 Oct.]
Q11-2) The case that the expatriate staff of foreign associated company works outside of Japan,
for the Japanese company’s business [updated on 23 Oct.]
Q11-3) The case of staff who left Japan temporary but can’t return to Japan. [updated on 23 Oct.]
Q11-4) The case of staff who have been abroad and returns temporary to Japan. [updated on 23 Oct.]

Q11)

Original version (Japanese)

Q11)

English version (translated by accountant Reiko)

Q11) The case of persons who can’t depart from Japan [updated on 23 Oct.]
I changed my job and began to work for foreign company. At first, I was going to work outside Japan(for more than one year) but I can’t depart from Japan because of world-wide spread of covid-19.
As a result, for the time being, I work for the foreign company’s business from my home in Japan.
Japanese Income Tax is not withheld from the salary the company pays for me. Do I need to pay Japaneseincome Tax? This foreign company doesn’t have any office/bases in Japan.

Tax Office’s Answer;〇

A person who has address in Japan, or have been in Japan for more than one year is regarded as aresident. (as article 2-1-3 of Income Tax law). And salary/bonus which the resident receives from the employee
are taxable as an employment income (as article 28 of Income Tax law).

〇

As for your question, you work at home located in Japan and work for foreign company.
As a result, you are treated as “a person who has address in Japan”, that is, a resident.
Therefore, even though your work place is supposed to be outside Japan, you need to do tax filing for theincome you receive from the foreign company.

※ When a foreign company without any office/base in Japan pay salary , Japanese income tax is not withheld from it because it’s
not paid in Japan.
※ When a person who was going to work in Japan but couldn’t enter, and, has to work at his/her country (that includes working
at his/her home located outside Japan), the person is regarded as non-resident of Japan. (as mentioned at Q11-2.)※ If you need to submit tax filing form but have to depart from Japan before 31 December, you’ll be a non- resident of Japanand you’re supposed to submit it before the departure or are supposed to decide your tax agent (attorney).
(as article 127 of Income Tax law, article117 of General Law of national taxes.)Q11-2) Original version (Japanese)

Q11-2) English version (translated by accountant Reiko)Q11-2) The case that the expatriate staff of foreign associated company work outside of Japan,
for the Japanese company’s business [updated on 23 Oct.]
Our company (domestic one) was planning to accept an expatriate staff from foreign parent company.
But the staff now works for our company’s business staying outside Japan because of travel restrictions
due to covid-19. Do we need to withdraw Japanese income tax from that person’s salary?

Tax Office’s Answer;〇

Resident is a person who has address in Japan, or have been in Japan for more than one year (as article
2-1-3 of Income Tax law) while non-resident is a person who is not a resident. (as article 2-1-5 of Income Tax law)〇

When a non-resident person receives salary based on work in Japan, the salary is taxable as domestic
source income. (as article 161-1-12 of Income Tax law).
And, if companies/persons who pay the domestic source income to non-resident persons, and pay it
in Japan, they should withdraw Japanese income tax from the salary. (as article 212-1 and others of Income Tax law).
Therefore, if they will pay the non-domestic source income to the non-resident, they don’t need towithdraw Japanese income tax.

〇 As for your question, that expatriate staff from parent company is non-resident because he/she doesn’t

have any address in Japan.
And, when the non-resident employee receives salary based on work in foreign country, it is not taxable
for Japanese income tax because it’s not regarded as domestic source income.
Therefore, your company doesn’t need to withdraw Japanese income tax from that person’s salary.

(For your information) When your company will invite the expatriate person as a board member.

When the expatriate person of the foreign parent company will be invited as a board member of yourcompany, the different rule is applied in some cases.
That is, when a bord member of domestic company who is non-resident of Japan receives salary from thatcompany, all the salary is regarded as domestic source income except the case that he/she usually works
as an employee of the company (for example, usually goes to work as a foreign branch’s manager.)(as article 161-1-12 of Income Tax law, article285-1-1 of Enforcement Rules of Income Tax Law)

Therefore, except some cases, a bord member of domestic company who is non-resident of Japan needto pay Japanese income tax for his/her salary which is regarded as domestic source one.
And when it’s paid, 20.42% tax is withheld . (as article 161-1-12 , 213-1-1 and others of Income Tax law)
※ If a person who was going to work abroad but can’t depart from Japan, now has to work at his/her home,
the person remains a resident of Japan. (as mentioned Q11)

Q11-3) Original version (Japanese)

Q11-3) English version (translated by accountant Reiko)Q11-3) The case of employee who left Japan temporary but can’t return to Japan. [updated on 23 Oct.]
Our company (domestic one) send some employees out to foreign subsidiary company and they usually stayfor three months. But, because of travel restrictions due to covid-19, now they stay at the foreign country overthree months. They work for our company’s business and we pay their salary.
In that case, is there any different procedure for the salary paid during scheduled three months and for otherperiod? These employees usually live their families in Japan and will do after getting back to Japan.

Tax Office’s Answer;〇

A person who has address in Japan, or have been in Japan for more than one year is regarded as aresident. (as article 2-1-3 of Income Tax law). And salary and bonus which the resident receives from theemployee are taxable as employment income. (as article 28 of Income Tax law).

〇 As for your question, they temporary live in foreign country but have their address in Japan.

It means they are resident.
Therefore, your company should withdraw Japanese income tax from their salary in the same way
as before, because they are residents in Japan. (as article 183 of Income Tax law).

Q11-4) Original version (Japanese)

Q11-4) English version (translated by accountant Reiko)Q11-4) The case of employee who have been abroad and returns temporary to Japan.
Our company (domestic one) send some employees out to foreign subsidiary company and they usually stay
more than one year. But, because of world-wide spread of covid-19, we asked them to come back to Japan
temporarily and after that they work for that foreign subsidiary company’s business, staying in Japan.
Other than the regular salary from the foreign subsidiary company, they receive the vacant home allowancefrom us which adjust their salary level.
Is it true that the person who temporarily get back Japan, like that case above, doesn’t need to pay Japaneseincome tax according to International Tax Treaty? Do we need withdraw income tax from the vacant homeallowance? And also, do they need to do tax filing in Japan?
We haven’t changed payment way since they got back, and the foreign subsidiary company doesn’t
have any branch/base in Japan.

Tax Office’s Answer;〇

Resident is a person who has address in Japan, or have been in Japan for more than one year (as article
2-1-3 of Income Tax law) while Non-resident is a person who is not a resident. (as article 2-1-5 of Income Tax law)
When a non-resident person receives salary based on work in Japan, the salary is taxable as Domestic
source income. (as article 161-1-12 of Income Tax law).
And if company/person who pays the domestic source income to the non-resident, they should withdraw
Japanese income tax when it’s paid in Japan. (as article 212-1 and others of Income Tax law).

〇On the other hand, even when the income is regarded as taxable one, you don’t need to pay Japaneseincome tax by taking some procedures if there’s a tax treaty between Japan and the country where theemployee lives and he/she meets the following conditions which determined by the tax treaty, that is,“tax exemption for short-term residents” below;【Tax exemption for short-term residents】
These three things are required;
1) Stay for 183 days or less during taxation year or continuing 12 months.
2) Employer who pays your salary/fee is not resident of the country where the work was done.
3) Any employer’s branch office or other permanent establishment where the service is provided
do not owe the duty of paying the salary/fee.
※ These requirement are general principals and there can be something different depend on eachtax treaty. Please check your actual case if you want to know exactly.

【About the vacant home allowance paid to them by domestic company while they temporarily stay in Japan】〇

Even after a non-resident employee temporarily got back to Japan, this person is still regarded as a
non-resident because he/she doesn’t have any domestic address.
And, about the vacant home allowance paid while the employee temporarily stays in Japan, it regarded
as the salary based on work in Japan, so it should be taxable as the domestic resource income.

〇

Based on the above, the vacant home allowance paid while the employee temporarily stays in Japan
doesn’t meet the requirement 2), so the tax exemption for short-term residents is not applied to him/her.
It means that he/she is a non-resident in Japan and 20.42% of withholding income tax is needed when
the salary is paid. (as article 213-1-1 and others of Income Tax law).
And also, no other tax related procedures are needed except the withholding income tax about thatvacant home allowance. (as article164-2-2 of Income Tax law).

【The salary paid by the foreign subsidiary company】〇

When the foreign subsidiary company pays salary for the non-resident employees while they
temporarily stay in Japan, the salary should be based on work in Japan and is taxable as thedomestic source income.
About this salary, withholding income tax is not needed because it’s not paid in Japan.
But the employees need to make tax filing form and submit it to Japanese Tax Office, as the domestic
source income. (as article172-1 and 3 of Income Tax law).
However, if an employee meets the requirements “tax exemption for short-term residents”,
the employee doesn’t need to pay Japanese income tax for that kind of salary.