Someone’s been a very bad boy
I often say the tax office is one of the best public offices to deal with in Japan. Staff are polite, helpful, and supportive. They don’t seem to see their job as getting money out of you, but instead try to support and help you through the system.
A few weeks ago I got a terrifying letter. Sent by the city tax department, they noted that I had seemingly failed to declare some part-time income, and that I would have to submit a revised tax statement.
This alarmed me somewhat, so I went in to speak to them the next day.
Once I’d found the right place (took a while, as no one seemed to know where it was either), a very nice man listened to my story, then sat down to help me fill in the paperwork.
The undeclared income was about 200,000 yen, so I would owe something like 30,000 yen on it.
Fair enough, I thought. Let’s just get this over with.
The man then said: “You must have had some expenses to go along with this. Can you remember them?”
I replied that, yes, perhaps there were some expenses, but I didn’t have the receipts.
“No problem“, he replied. “Let’s get some of them down”.
Prompted by the officer, I came up with some travel, percentages of phone bills, omiyage(???), and a couple of other random things. Surprisingly, one of the only genuine expenses, website hosting costs, wasn’t allowed. Go figure.
“Hmmm”, said the man. “I really want to get your taxes under 9,000 yen. Can we put down something like printer ink?”.
“Uh, okay?” I said.
“Done”, he said with some satisfaction. “You should get a bill in the post in a few weeks time for around 9,000 yen. Thank you very much.”
I walked out somewhat bemused. Only in Japan would a tax officer take someone who was prepared to pay their taxes in full and unilaterally spend twenty minutes trying to lower them (and succeeding!).
I can only imagine how the UK tax office would treat someone who ‘forgot’ to declare some income, or even worse, the IRS 😉
So I’m a fan of Japanese tax officers. My wife, as a self-employed small business owner, has had much less pleasant experiences.
How about you? Any tax office stories?
Seriously? The tax authority going out of their way to find legal ways to reduce the overall tax bill?
If the same thing happened in Singapore, we’d probably be slapped with maybe a late payment penalty, extra administrative fees and a fine for failing to declare extra income sources.
Wow. Just wow. Not sure what to say other than utter disbelief =)
Maybe it’s just my winning smile and air of honest incompetence 😉
TBH, I would take Singapore’s lower tax rates over Japan’s friendly tax officials any day.
LOL
I’d take a combination of the two 😉
I have had similar experiences where tax officials have actively helped my wife and I structure our tax deductions more effectively. It is one of those things that is like a microcosm of Japanese society: the rules on paper being absurdly strict and onerous but the practical application of the rules is lenient and friendly.
That said, I have friends who have been busted for under-declaring and the penalties are significant so be careful!
Can I ask how the tax office discovered you had undeclared income? Asking for a friend of course, but I am always curious what powers the tax office has to validate self declared income (short of an audit).
I didn’t ask and they didn’t tell me, but I presume the company that paid me declared it and someone cross-referenced?
In terms of income tax I had the 10% deducted automatically, but local inhabitants tax hadn’t been paid I guess…
Ah, yes. There is no automatic withholding for local inhabitant tax. You need to either instruct the company paying to withhold it or pay it directly if I recall. I had a similar situation occur where my company was not deducting my inhabitant tax and I got sent a very large bill from the ward office. Not a pleasant surprise.
Since you paid income tax, the guy obviously believed you weren’t deliberately trying to evade, and that it was an honest and small mistake.
Or I have an honest face 😉
Japan is (mostly) good like that. The flipside is that when they want to nail you they can…
Do you remember how much part-time income you can earn on top of your regular income without having to submit a tax return? Was it 100,000?
I believe it is 200,000 yen a year.