Our Solutions

Japan Payroll Outsourcing

New Horizons will simplify and fast-track your expansion into Japan

Setting up and managing payroll in Japan

Japan’s advanced economy, ranked third largest in the world, and exceptionally strong cultural work ethic can make it an excellent place to expand your business. An important part of this kind of international expansion is hiring and paying employees locally. While this is a great way to access local expertise, the hiring and payroll processes can be complex for foreign organizations to navigate. Language barriers, cultural differences, and unique sets of regulations can all add to the confusion.

A popular way to bypass the complexity of Japanese employment is to utilize a Japan payroll outsourcing system and transition payroll administration to a global PEO. At New Horizons, we can work with you to establish and run a fully compliant Japan payroll to facilitate your expansion, whether or not you already have an entity in Japan.

Why choose the New Horizons payroll solution?

If you have an entity

Have you already set up a legal entity within Japan? We can take all the complex payroll administration off your hands, helping you employ locally in accordance with local employment laws, managing HR, contracts, and any associated administration.

This service is well-suited to larger organizations and those who have already registered a presence in Japan that could benefit from Japan payroll outsourcing and consultancy services.

If you don’t have an entity

Are you yet to establish a legal entity within Japan? Choose our full payroll service to use our established Japan PEO as your employer of record in the country. Through our entity, we can manage all of your in-country payroll, contracts, HR, and administration.

This flexible payroll service is perfectly suited to any organization looking to expand into Japan and Asia with low risk and has not yet established an entity.

Simplifying your Japan Payroll processing

Reliable Delivery

We guarantee that all payments will be on time, your data will be secure, and you can be up and running within just 48 hours.

Established Presence

Our in-country subsidiary will act as employer of record, offering you a presence in Japan for legal local employment.

Flexible Solution

Our team will manage all of the admin, payroll, HR, and taxes, so you can focus on building your business in Japan.

Up-To-Date Compliance

With the everchanging Japanese employment laws, we’ll ensure you stay fully compliant at all times.

Single Point of Contact

Our centralized service gives you a single point of contact, simplifying the entire in-country employment process.

Proven Japan Expertise

Our in-house teams of payroll and HR experts have already helped dozens of organizations expand into Japan.

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Japan payroll tax rates & laws

What are the tax and withholding rules in Japan?

Japan follows a progressive tax model similar to most countries, with higher earners paying a higher percentage in income tax. The major taxes are a national-level income tax (set at between 5% and 45%) and a local tax which depends on the employer’s location.

Beyond these standard income taxes, both employees and their employers must pay towards the nation’s social security fund, paying 50% each. This fund provides all kinds of wide-ranging benefits, such as pension and healthcare.

The corporate tax rate is 23.2%, but this generally rises to between 30% and 34% with local taxes included.

Pension
9.15%
Unemployment Insurance
4.98% – 5.815%
Health Insurance
0.6%
Work Injury
0.25% to 8.8%
Family Allowance
~0.29%
Total Employer CostUp to 24.66%
Pension
9.15%
Health Insurance
4.935%
Unemployment Insurance
0.3%
Total Employee Cost 14.39%
Up to 1.95M
5.00%
1.95M – 3.3M
10.00%
3.3M – 6.95M
20.00%
6.95M – 9M
23.00%
9M – 18M
33.00%
18M – 40M
40.00%
Over 40M
45.00%

Contractual rights and termination regulations

Employees in Japan should always be provided with a formal contract of employment. This contract should detail all entitlements, such as paid annual leave, sick pay, maternity leave, and so on. Paid maternity leave, for example, must legally cover six weeks prior to the birth date and eight weeks after.

Regarding termination, there is no legally required severance pay, but employees must be notified at least 30 days prior to termination.

How to establish Japan payroll outsourcing

Prior to establishing up a Japan payroll, you will need to open Japanese bank accounts and register with various official bodies. Additionally, you are legally required to sign up for withholding tax, national labor insurance, and social insurance.

The process of establishing a Japan payroll system in Japan varies for different types of organizations. Usually, an organization will fit into the categories of either Kabushiki-Kaisha (similar to an incorporation), Godo-Kaisha (close to an LLC in the USA), Gomei-Kaisha (general partnership), or Goshi Kaisha (limited partnership), but there are further classifications.

A simpler option is to utilize a system for your Japan payroll outsourcing and hand over the setup and management to New Horizons. Our experts will handle everything for you, from setup to HR and compliance work. We also offer our Japanese subsidiary to act as employer of record for your in-country employees, so you can benefit from our outsourcing solutions even if you don’t have an entity in Japan.

Organization Name
Description
Kabushiki-Kaisha
Most common type of company in Japan
Godo-Kaisha
General partnership company
Goshi Kaisha
Structure is similar to that of a limited partnership company

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Find out more about our Japan payroll services