Let me introduce you to an excellent aspect of life in Japan – “Furusato Tax”.
What is it?
You choose a regional town to donate money to. Once you donate this money, the town will send you a present in return. The money you donate is then deducted from your city tax payments the following year, making your gift essentially free (sans 2000 yen).
The gifts range from meat, fruits and vegetables, sweets to local products. You can donate as much as you want up to a limit which is set by your salary (the higher the salary, the higher the limit, meaning wealthy people can get quite valuable gifts). You can choose to donate your entire limit to one town, or split the amount between multiple towns.
Why does Japan do this?
The idea to for tax money to be filtered out of big cities like Tokyo and into smaller area to fund regional projects and revitalisation. This is necessary because these days many people move out of the countryside and into cities like Tokyo or Osaka, meaning the smaller towns have very little tax revenue. The donations fund various projects in each town, and when you make your donation you are able to choose which cause to support.
How does it work?
Step 1: Choose where to donate to
Most people choose based on the gift they want to receive.
Step 2: Donate money up to your limit
Go to this website to check your limit: https://www.soumu.go.jp/main_sosiki/jichi_zeisei/czaisei/czaisei_seido/furusato/mechanism/deduction.html
It’s in Japanese but you can translate the page. If you need assistance calculating your limit, contact Omakase Helper.
Be sure to donate by December 31st.
Step 3: Receive the gift as well as a proof of donation
Keep all the paperwork, you will need it!
Step 4: File tax return and then pay less city tax next year
Make sure to file your tax return by March 15th of the following year. When filing the tax return, you will need a certificate/receipt of your contribution issued by the municipality you donated to, and proof of payment.
There is another option for taxes. The “one-stop exception” system allows you to skip filing a tax return, but you need to meet the following requirements:
a) You don’t need to file a tax return yourself
b) You donated to 5 or less areas
You apply for this by filling out this form: https://www.soumu.go.jp/main_content/000351462.pdf
It’s in Japanese, so Omakase Helper can help you if you need it. Just send us a message through our contact form.
You need to send this to your ward tax office with a copy or your My Number or other ID. When the office receives it, you will receive a notification in the mail.
Where can you see what gifts are available?
Here are three websites which you can browse to find gifts.
Some of the gifts I have received in the past were:
- A box of 20 mixed ice creams from Okinawa
- A mix of local honey from Shizuoka
- A vegetable and fruit crate that came twice a year
- A night in a ryokan in Kochi plus a rental car for 2 days
- Grape picking and a sightseeing taxi in Yamanashi
- A night in a barbecue and lodge facility in Hokkaido