RetireJapan

Since September I have been doing some part time work. The company sends me an invoice which I electronically sign and return. No tax is deducted but a 10% sales tax is added and paid to me. I am not registered as a business and am a regular white tax form user.
How do I declare this income and what to do about the sales tax? The company said I shouldn't`t have to declare the sales tax which does not sound correct.

Normally they should be deducting 10% "withholding tax". But if they don't, it doesn't make any difference: you simply write down the extra income, and will have to pay tax on it at your marginal rate. ... I imagine you also have regular employment, to use the white form. I think you probably want to switch to the "blue" form (it is actually white), but I can't remember any procedure for this, as I have been submitting "blue" forms for >30 years.

The "Sales tax" (SHZ) thing is indeed weird, but the company is correct. Unless your gross income exceeds 1000man, you do not need to register for SHZ, and you can simply keep the extra money, which the company can nevertheless claim in their "output tax". I used to be a freelance translator, and the market rate for such work generally factored in the fact that most translators did not go over 1000man gross income, so were getting 11/10 times as much as the translation company was notionally paying. But I also became an exporter (of jigsaw puzzles on the net), so I needed to register for SHZ, to claim back all the tax we paid to our puzzle suppliers (since exports are not taxable). But this meant that for translation work, I did have to hand over the extra 10%, and was essentially being paid 10/11 of my pre-SHZ self.

Of course you have to write down the amount received for the job, including this fake "tax".

Hope this helps... perhaps someone else can clarify the blue/white form business...

PS: Sorry, forgot the most obvious piece of news here. All this will change in November, with the "Invoice" system, meaning that they do it properly, as in the original French idea. You will only be able to issue an "(SHZ) Invoice" if you are registered for SHZ, and the company will not pay you the 10% extra unless you give them an invoice for it. In my situation, it would have meant that they paid me the extra 10% (because I was accounting for it), but not the other translators I was competing with.

My understanding was that the 10% consumption tax is basically a freebie for people with only a little bit of side income. Normally you would need to declare the consumption tax, but under a certain amount they just let you keep it. Sorry I don't know the concrete details.

I do know they are starting an invoice system from October this year, details in Japanese on the NTA's site, that might explain the current rules too https://www.nta.go.jp/taxes/shiraberu/z ... _about.htm.

P.S. imaginatorium's last paragraph was ninja-edited in while I was replying.

imaginatorium wrote: ↑Sun Feb 19, 2023 5:36 am it would have meant that they paid me the extra 10% (because I was accounting for it), but not the other translators I was competing with.

I don't think it's a competitive disadvantage for you though, because they would also deduct the consumption tax paid to you from the consumption tax they received from their own customers, so the end result for them would be the same, right?

adamu wrote: ↑Sun Feb 19, 2023 8:59 am P.S. imaginatorium's last paragraph was ninja-edited in while I was replying.

imaginatorium wrote: ↑Sun Feb 19, 2023 5:36 am it would have meant that they paid me the extra 10% (because I was accounting for it), but not the other translators I was competing with.

I don't think it's a competitive disadvantage for you though, because they would also deduct the consumption tax paid to you from the consumption tax they received from their own customers, so the end result for them would be the same, right?

Sorry, it was a bit confused. The new "Invoice" system will be fair; no advantage or disadvantage to being registered. But the point is that previously, (the "TEKITOU" system preceding "INVOICE") when I was SHZ registered ("for puzzle purposes"), it meant that I only received 10/11 of what most similar competitors were being paid, because the translation company was able to claim output tax to translators, whether or not they were actually handing it over to the government.

Thanks for the answers. 10% bonus is nice.
I assume I can charge some expenses against the income?