Japan Tax

Unsurprisingly, the purpose of an emergency fund is to help you deal with unexpected things that come up in life. Let’s face it; no one knows what is going to happen tomorrow. And if something unfortunate should happen, it is probably going to require money.

One commonly misunderstood financial principal is the importance of deferred taxation. Some people figure that since taxation is inevitable there is no point worrying about whether you pay the taxes now or later.

Mathematically speaking, this is far from true. The more assets you have available to compound, the greater your total returns. Taxation erodes your asset base leaving you less money available for growth.

As more and more foreigners elect to stay in Japan for longer periods of time, it is important to have an understanding of basic tax issues. One question that arises with some frequency is what it means to be a permanent resident in Japan.

For tax reasons and immigration purposes the term “Permanent Resident” are independent of one another. In other words, it is possible for a foreigner living in Japan to be a permanent resident for tax purposes, while maintaining an immigration or visa status other than Permanent Residency (eijyuuken).