Annual Payroll Deadlines
We would like to remind HR managers and payroll managers of the following important upcoming
July 11th deadlines:
Full time employee withholding tax payment for semi-annual tax payers
Filing of Social Insurance Annual Report (Santei)
Filing of Unemployment Insurance – Annual adjustment and estimate payment
These are significant payments and may present small business owners with cashflow issues.
For further information on these, please contact your payroll provider or Solid Japan at info@solidjapan.com.
Consumption Tax Increase
The Japanese government is preparing to increase the consumption tax rate. The first increase is reported to be made in 2013 and reaching 10% by 2016. The government is cautious about raising the tax due to the fragile state of the economy since the Great Tohoku Earthquake.
The International Monetary Fund has recommended that Japan begin raising its consumption tax in stages up to 15%, three times the current rate. The IMF warns that this increase is necessary to reign in Japan’s increasing debt which is the highest of industrialized nations as a percent of GDP.
Discussions on an increase in the consumption tax have been occurring for a number of years. Each administration has been reluctant to raise the rate due to the political backlash that occurred during its 3% introduction in 1989 and subsequent increase to the current 5% in 1998.
While Japan’s current rate is quite low compared to other developed countries, unlike most countries, it is a blanket tax on nearly all goods and services.
Hiring Contractors?
If you hire contractors, it is important that you have a proper Independent Contractor Agreement in place and understand the potential tax and labour issues that could result. There are ways that employers can protect themselves against potentially costly problems.
Does your company have work rules?
Did you know that companies with more than 10 employees must have formal work rules registered with the Labour Standards Inspection Bureau? This is a formal procedure that goes beyond a regular internal company rule book or policy and procedures manual.
Contact Solid Japan at info@solidjapan.com for further information on these and other HR issues.
Japan Free Trade Agreement News
Japan and Peru completed 2 years and 7 rounds of negotiations with a new Free Trade Agreement (FTA) at the end of May. The agreement will reduce 99% of tariffs over a ten year period. Japan will benefit with the removal of a 9% tax on Japanese imports on automobiles and electronics. Peru will benefit by the removal of tariffs on natural resources such as zinc and copper, along with marine and farm products.
The Japanese business lobby, Keidanren, along with its counterparts, The China Council for Promotion of International Trade and the Federation of Korean Industries, have jointly pushed its nations’ leaders to work toward an FTA that also involves the ASEAN nations. The leaders of the three nations, Prime Minister Naoto Kan, Premier Wen Jiabao and President Lee Myung Bak all expressed hopes to move toward this goal during the visits of the latter two to Japan. The two were in Japan to show support after the Great Tohoku Earthquake.
It was also reported that during the G8 summit last month in France, Canada and Japan agreed to complete an FTA study to investigate the details of a future agreement.
Japan is also progressing toward preliminary trade agreement talks with the European Union and considering joining the Trans Pacific Partnership with the US, Australia and other nations in the region.
Japanese Economy
Both the Japanese government and the Bank of Japan have reported positive growth for the Japanese economy later this year. A government report upgraded its view on the economy as automakers’ production and supply chains recover. This is the first positive assessment by the government since February. A Bank of Japan member has stated that Japanese production could return to pre-quake levels as soon as the July-September quarter due to the improvements that are currently being observed.
Thinking of starting a business in Hong Kong?
Our sister company, Solid Business Solutions International can help with your Hong Kong incorporation, tax and accounting needs.
For more information, contact us today at info@solidjapan.com.
Tokyo Executives Business Mixer
Solid Japan will be sponsoring the Tokyo Executives Business Mixer on Thursday January 26th. More information is available at www.tokyoexecutives.com.