Salary & Tax

Salary & Tax

Salary Level of IT Engineer's with Salary Market Trends in Japan

Companies recruiting foreign IT engineers are increasing due to the labor shortage in Japan. On the other hand, there are considerable differences between companies in terms of salary and treatment that can be provided that match the needs of foreigners. So, first of all, we will explain the results of a survey on IT engineers to find out what level of salary is satisfactory and what is the standard salary market trend in Japan. In addition, we will introduce the points you should be careful with in terms of treatment and to who consult when you are in doubt. 1.1. Why is the salary market trend important? Isn’t your visa issued unless your salary is at least equal to the Japanese salary? What do you think is the motivation for companies to hire a foreigner? There are two main patterns. ・ They wants to recruit talent that is not available in Japan ・ They wants to recruit talent equivalent to Japan First one is those who have a great skills which Japanese don’t have and get enough treatment to cover everything from housing, meals and maids, all this as company expenses. However, there are few talents in reality. If you see this article and have a rare skill that can be useful in Japan, be bullish on salary and treatment. When negotiating, one of the tips is to negotiate through agents. On the other hand, the latter is the engineer whose salary market is a problem. However, in addition to economic benefits, knowing the Japanese market from the residency system is the key to changing jobs. Foreigners need a residence permit and work permit. So-called visa. In the case of Japan, a work permit will not be granted unless the salary is equivalent to that of a Japanese by a Ministry of Justice ordinance. Therefore, when you work in Japan, you should consider the “salary market of Japanese engineers” and “treatment unique to foreigners”. In addition, in order for foreign IT engineers to work in Japan, it is normal to work with a “technical” status of residence = workable visa. These visas are usually obtained with support from the company. Don’t take visa support as granted, and in case there is support available, ask your company how much support you can get from them. 2.What is the salary market trend for foreign IT engineers? Let’s get to know the Japanese IT engineer’s salary market. Since salary is an important part for obtaining the status of residence, then what is the salary market for Japanese IT engineers? What we’ll say from now shows the average salary by occupational type, as surveyed by DODA who is one of the largest HR company in Japan and published on January 20, 2020. As the survey, it can be said that the income of IT engineers in the upstream process is higher and that the downstream is lower. However, considering the age, experienced IT engineers can expect an annual income of over 6 million yen downstream even after the age of 50, and it exceeds the 4.41 million yen which is the average salary of workers in Japan (FY2018, according to the National Tax Agency). In addition, the market of annual income for IT engineer is not only by occupation but also by industry or area. For example, as shown in the survey at this link (Heikinnensyu.jp), if you compare the same SE position, the industry with high technical requirements and high economic conditions, such as those found in financial SE and information and communication, has higher annual income. The average annual SE income by industry exceeds 16.6 million yen in the highest finance and insurance industries and 11.8 million yen in the information and communications industry, while the lowest in the transportation and postal industries has a wide range of 4.80 million yen. In our opinion, the finance and insurance industry and the information and communication industry are too high on the website, there might be some bias for the data. However, depending on which industry you choose and on your level of technological skills, these can be said that salary is likely to change greatly even for the same SE position. By the way, “The wall of 6 million yen” is often said for the annual salary of IT engineers. Because it is difficult to work with an annual income exceeding 6 million yen and salary satisfaction increases when it exceeds 6 million yen. Looking at the whole occupations in Japan, the occupations with an average annual income of more than 6 million yen are a small number of occupations in the upstream according to the survey results through all ages. However, as the age increases, the number of occupations whose average annual income exceeds 6 million yen will increase slightly. Beyond the age of 50, the average annual income for most occupations is over 6 million yen. For example, the debug tester’s annual income has also risen, with an average annual income of 6.61 million yen, far exceeding the average annual income of all office workers. It is a job that is said to be simple and steady, but considering that you will work for a long time in Japan, it will be considered as one of the more attractive jobs. In this way, it is necessary to consider whether the salary is an acceptable one, considering age and experience. 3.What should foreign IT Engineers be aware of other than salary? It is not recommended to only consider salary market when considering the salary. For example, if you are wondering which company is better with the same 5.5-million-yen salary, it is important to consider the following factors. ・ Overtime working hours ・ Welfare ・ Systems such as company training and mentors ・ Support for family visa acquisition It is important to get to know the actual working style, such as whether the workplace is too hard together with overtime hours, judging from salary alone may even damage your health. So it is important to be careful with. Among benefits, other than special holidays, there are systems and health examinations that fit the sense of IT engineers who work hard, such as subsidized food and meals provided by the company, and that are economically beneficial. It is a good idea to pay particular attention to items that require a large amount of expenditure, such as whether they will bear the burden or reduce the burden at their own expense. As a foreigner living in Japan, the Japanese language is always needed to be improved. It would be better if the company has an educational program. Also, if you have family visa support, you can reduce your out-of-pocket expenses. It is important to make sure if your family will be supported. 4.G Talent is the service that supports Foreign IT engineer decisions. For that reason, the salary of foreign IT engineers is also required when obtaining a visa, so let’s negotiate with the company to aim for a salary with the same market price as the Japanese occupation and industry. However, there are many other factors that actually affect salary, such as visa support, benefits and educational training programs, and negotiating these one by one is a difficult task. And, in the end, you’ll often find yourself worried about some of the several companies you’ve narrowed it down. In this regard, it is considered that using recruitment service agents specializing in foreigners has a great advantage. For example, with our G Talent’s service, you can get bilingual support expert on IT talent with free. It will help you bridge the gap between individuals and companies during negotiations. And you don’t need to worry about words. In addition, G Talent is a long-established English conversation school. The company also has know-how in training programs and is well-versed in the education and training programs of recruiting companies, providing objective advice and insights. Therefore, G Talent is well aware of the recruitment performance of bilingual global talent at each company. We have a lot of projects with companies with a proven track record, so if you are a candidate for a foreign IT engineer, your options will be expanded after receiving the GTalent service. G Talent – Professional IT Recruitment https://www.gtalent.jp/ Conlclusion The salary market of foreign IT engineers is considered the same as the salary of Japanese IT engineers. Visa requirements also require a salary equivalent to Japanese by Japanese government. In general, the salary level of IT engineers is considered to be higher than the general office workers, but it does not seem to be an attractive salary for some young people in the downstream process. However, it is difficult for foreign engineers to understand the actual total amount of salary if they don’t look at the benefits, like training from the company, visa support, etc. We recommend you to seek the help of a professional advisor like G Talent and be sure to change jobs with a reasonable salary.

Salary & Tax

Japanese Tax that Foreign Workers in Japan Want to Keep in Mind

When foreign workers start working in Japan, they will pay “Japanese taxes”. If you don’t have knowledge about Japanese taxes, you may pay extra even when you can reduce them, or you may forget to pay them and get a high bill for late tax payment. First of all, let’s know the basics of Japanese taxes and Japanese taxes on foreigners to avoid losing money. Types of Japanese Taxes Not only foreign workers living in Japan must pay taxes, but also foreigners who came to Japan to work for a short period of time and earn an income. Japanese taxes are divided into “national taxes” paid to the country and “local taxes” paid to prefectures and municipalities. The table below lists the main taxes in Japan. As you can see, there are many taxes in Japan, but you don’t need to understand everything. For example, “consumption taxes” such as consumption tax and liquor tax are included in the money you pay when you shop, so you won’t forget to pay or overpay. In addition, “taxes on property” such as automobile tax and property tax are simply paid by people who have property such as cars and land. There are three things that foreign workers living in Japan should understand: “income tax”, “resident tax” and “inheritance tax”. Income Tax for Foreign Workers What kind of tax is income tax? Income tax is the tax you pay when you earn money. In Japan, people with income are obliged to pay income tax, and as a general rule, they are taxed on the income earned in the year from January 1st. Foreign workers should check their classification! Japan’s income tax law divides individuals according to their “style of residence”, and the taxable range varies depending on the classification. Foreign workers need to know which of the following categories they belong to: Standards and ranges for foreign workers to pay income tax The taxable income tax that needs to be paid by foreign workers living in Japan depends on the following three categories. What is “Income Tax Deduction” and how it allows foreign workers to reduce taxes? The formula for calculating the income tax amount is as follows. Income tax amount = Income amount × Tax rate This formula works as a base only and does not consider other deductions (a system that reduces taxes). There are various deductions for Japanese income tax. The deduction methods are divided into “income deduction” and “tax deduction”. Income deduction subtracts a certain amount from the income amount, and tax deduction subtracts a certain amount from the income tax amount. If both deductions apply, modify the formula as follows: Income tax amount = (Income Amount - -Income Deduction Amount) × Tax Rate – Tax Deduction Amount Also, there are different types of income deductions and tax deductions. Resident foreign workers can receive all deductions in the same way as Japanese if they meet the requirements for each deduction. Non-residents, on the other hand, can only receive three deductions: miscellaneous loss deduction, donation deduction, and basic deduction. Among the many deductions, the deduction that foreign workers living in Japan should know is the “foreign tax deduction”. What is foreign tax reduction? There is a problem of “double tax payment”, which is whether foreign workers (residents) who have income tax on overseas income must pay taxes to both their home country and Japan. In order to prevent this double tax payment, the “Tax Treaty” was established between the countries. Let’s suppose you have a foreign worker from a country that has a tax treaty with Japan. If the person paid income tax in his / her home country for income earned in his / her home country, if he / she reports to Japan, the income tax paid in his / her home country will be deducted from the Japanese income tax. This deduction is called “foreign tax deduction”. However, foreigners from countries that do not have a tax treaty with Japan, must pay double tax. In addition, even if you have a tax treaty, you should be aware that the scope of foreign tax credits may vary depending on the signing country. >> Check here for countries that have signed tax treaties (Check out Japan’s tax treaty network) Resident Tax for Foreign Workers What kind of tax is resident tax? Resident tax is a tax paid to the municipality where you live. It consists of two types, prefectural and municipal taxes. The formula for calculating the residence tax is as follows. Municipal Tax Amount = Income Rate+ Per Capita Rate ※ What is income rate? The amount to be paid according to the amount of income. Basically, the income amount of the previous year × 10% (6% municipal tax + 4% prefectural tax). ※ What is per capita rate? Amount paid by people living in the same local government regardless of their income. There are regional differences, but is around 5,000 yen. Standards and ranges for foreign workers to pay municipal tax Resident tax applies to individuals with addresses in local governments regardless of nationality. Whether there is an address is determined based on January 1 of that year. For example, foreign workers who have been working in Japan since February 1, 2019 but did not have an address in Japan as of January 1, 2019 will not be subject to 2019 residence tax. In addition, the income rate for municipal tax is applied on all income earned in the year from January 1 of the previous year. In other words, foreign workers who have no previous year’s income, it won’t apply. Inheritance Tax for Foreign Workers What kind of tax is inheritance tax? Inheritance tax is tax that may be paid when you inherit the property of a deceased person (real estate, securities, savings, etc.). The formula for calculating the inheritance tax is as follows. Inheritance Tax = Inheritance-Standard Deduction x Tax Rate-Deduction There are various deductions for inheritance tax. The tax rate varies from 10% to 55% depending on the amount of inherited property. Standards and ranges for foreign workers to pay inheritance tax Whether foreign workers bear the inheritance tax depends on whether the address of the heir (inheritor) or bequeather (the person who died) is in the country or outside the country, and if the inherited property is in the country or abroad. Inheritance tax may occur in Japan when inheriting overseas property, but in this case, double payment will occur. However, as with inheritance tax, “foreign tax credits” are applied in the same way as income tax, so foreign workers from countries with tax treaties can avoid double payments. Conclusion You will receive a reminder when you are behind with taxes in Japan. If you do not pay even if you receive a reminder, the arrears tax will increase, and eventually you will be subject to administrative sanctions and your salary and property will be seized. If a foreign worker works in Japan as a company employee, income tax and resident tax will be deducted from the salary, so you do not have to pay it yourself, but if you work as a business owner or a freelancer you must pay them yourself . Get basic knowledge to avoid forgetting to pay or overpaying. Japanese inheritance tax is very complex and has a deadline of 10 months. In the unlikely event that inheritance occurs, it is better to consult an expert promptly.

Salary & Tax

Japanese Salary Systems, Salary Guide and Calculation Method

Many foreigners haven’t yet understood the Japanese salary system properly, so when the salary is transferred to their account, they are surprised to find out that it is less than what they were expecting to receive. That is why I will explain in detail the following guideline and, also, the calculation method. The salary system that everyone who works must know Salary can be obtained as compensation for labor and for contributing to the company. It is an indispensable asset for living. If it is a fixed salary such as a monthly salary, it is a very important indicator that determines the standard of living of every month. However, if you get a lower amount than the salary you thought it would be before you joined the company, you will be shocked. To prevent such a situation, deepening the knowledge into the salary system should be helpful for starting to work comfortably when changing jobs. What is Salary After Tax Income? In Japan, the amount of money that is actually transferred to a designated bank account is called the “After-Tax Income”. This is the total salary paid by the company minus social insurance premiums and taxes. People who don’t know the details will feel that it is “less than what they expected …”. What does “After-Tax” mean? Actual income that you receive= “After-Tax”, but there are various breakdowns in salary. It is referred to the amount of money deducted from premiums such as company insurance premiums, pension and taxes such as income tax and resident tax from the face value provided by the company, like base salary (hourly wage, daily wage, monthly salary), paid overtime and company’s allowance. About “Face Value” and “Deduction” Rather than knowing the amount of money after-tax, what is important to know is the “face value (total payment)” and the “deduction” amount. By gaining knowledge about face value and deductions, you can improve your understanding of how your income is determined. The details are as follows. The “face value” is the total amount paid by the company There are various face value breakdowns. This should be noted because there are differences between companies. (1)Basic salary This is the basic amount for which the amount of payment is determined, such as hourly, daily, and monthly wages. This basic salary does not include incentives such as overtime, allowances, and commissions. (2)Overtime allowance An allowance that exceeds the business hours (working hours) determined by each company or that exceeds the legal working hours of 8 hours a day, 40 hours a week (an increase of 25% or more from the hourly wage). In other words, paid overtime. (3)Late Overtime allowance The allowance paid when working overtime after 22:00 (over 25% from the hourly wage) or working on holidays (over 35% over the hourly wage) among overtime exceeding the business hours. (4)Qualification allowance Allowance paid to professionals and other persons who have the qualifications required for the business specified by the company. In some cases, the amount varies depending on the level of difficulty in obtaining national qualifications. (5)Executive allowance Generally, it is paid to those who are promoted and move to managerial positions. In most cases, the amount varies depending on the position, chief, director or general manager. (6)Commuting allowance Allowance for subsidizing a full or fixed amount of transportation expenses for those who commute using transportation such as trains and buses. Some companies may pay gasoline to those commuting by car. In addition to these, there are many peculiar benefits like family allowances paid as a subsidy for employees with dependents, housing allowances to support housing expenses such as rent and mortgages, and business allowances for companies with business trips. “Deduction” is the total amount deducted from salary “Deduction” is calculated from half of the total amount of social insurance, such as insurance premiums and pensions, resident tax and income tax are deducted from salary. Excluding income tax, the amount will not change for the first year after the amount is determined. (1)Health insurance This is a national medical insurance policy that allows you to visit a medical institution if you are ill or injured. The insurance premium will be halved with the employer. Also, the insurance premium rate will vary depending on the health insurance association you are registered. (2)Employment insurance It is widely recognized as an insurance policy that provides unemployment benefits in the event of unemployment, even though there are various benefits. The insurance premium rate will depend on the company’s business. (3)Nursing insurance With insurance that requires participation when the target age is over 40, you can receive welfare services at 10-20% when you need nursing care. (4)Employee’s Pension This is a system in which the participant himself / herself and the employer pay half the price and pay a premium to receive pension payments. (5)Income tax This tax is imposed on the income earned by an individual for a year, and the tax rate varies depending on the annual income. If you work for a company, it will be deducted by “withholding” and settled by “year-end adjustment or final tax return”. (6)Resident tax This tax is paid to the prefecture or municipality where the worker resides. The amount is determined by the annual income of the previous year. In addition, there are cases where labor union fees, retirement reserves, company housing, etc. are deducted. Let’s actually take a look at the salary details It is easier to understand when you see the actual salary details, rather than just checking the amount of the salary after-tax. The details and item names of the pay slip may differ depending on the company, but in general, the amount indicated in the item “Amount of deduction” is the “withholding amount”. What is the guideline for after-tax income? I’ve told you in detail about “face value” and “deduction”. But, if before joining the company you know the salary listed on the job offer information, you can get a clue of the amount of after-tax income. So, from here, I will explain how to get the amount of money that will serve you as a standard. What percentage of face value can you receive as an after-tax income? An approximate standard is 80% (75-85%) of the face value is the “after-tax income”. However, the percentage varies depending on the person even at the same face value. For example, the amount of deductions varies depending on the previous year’s annual income and the number of dependents. Besides, the higher the face value, the higher the income tax rate. If it exceeds approximately 600,000 yen/a month, the percentage of the after-tax income will fall below 75%. Example of tax exemption for dependents between a single person and someone with dependents. In the case of a single person, if the monthly salary is 250,000 yen, about 80%, ¥197,690 will be the net income. In the case of a married couple with two dependents, you can receive a “dependence deduction” that is preferentially paid by income tax/resident tax. ¥ 200,430 will be the net income, which is an increase of ¥ 9000. What is the calculation method? As I mentioned earlier, about 80% of the face value is taken. In other words, as a calculation method, you can calculate the approximate take-up amount by multiplying the face value by 0.8. * Please note that the amount of income may change in conjunction with the deduction total depending on income tax and dependents. How to accurately calculate salary after-tax income f you know the face value (total amount of payment) and the breakdown of deductions, you can easily derive the exact proceeds. The calculation method is [basic salary + fixed allowance + variable allowance (other than bonus)]-[social insurance premiums (health insurance, long-term care insurance, welfare pension, employment insurance)]-[tax (income tax, resident tax)]. By following those steps, you can calculate it. How to derive an approximate amount from a bonus Some companies offer bonuses twice a year or once a year. For that bonus, you can calculate the approximate take-up amount at approximately 82% of the face value. For example, if a single person with a basic salary (monthly salary) of 220,000 yen gets a 660,000 yen bonus for three months, the proceeds will be approximately 540,000 yen. This also applies to your case, as the percentage of net income varies depending on the total deductions. Important points when changing jobs During your career change period, you will see a variety of job offers. In that case, it is very important to pay attention to the net amount. If you make don’t get it right, your income may be lower than your previous job. Be sure to check prior information and to get a deeper knowledge of it, to find a company that meets your needs. The salary in the job offers is not the net income. Most salaries listed in job listings and job sites in Japan will show the “face value”. In other words, the net income you will receive as a salary will be less than the amount listed there. Therefore, if you are looking for a place where you can change your salary to a better than the previous job (the current job at the time of job change), you can compare the face value or multiply the salary listed in the job offer information by 0.8 to calculate the approximate net income. Let’s consider it after that. Tell the face value of the desired salary instead of the net amount. There are cases where the salary changes depending on the job seeker’s experience and ability, such as “monthly salary of over ~” or “monthly salary of ¥ xxx to ¥ xxx”. Be sure to tell the face value when you are asked about your desired salary. If you tell the net income, the recruiter will think of it as the face value and you will have a lower income than the one you wanted. Let’s confirm the desired salary with face value so you don’t regret it after joining the company. Conclusion Even if you meet a good company or job as your next destination, you will not be able to improve your life if your salary is less than expected. To prevent this from happening, it is very important to know the “after-tax income amount” which is the money you will have at hand. Acquire the knowledge to determine the correct salary for each opportunity, regardless of the face value amount listed in the employment information, and use it for future job change activities.