Banking, Money and Taxes in Japan

The Japanese banking system is one of the best and most reliable in the world. Expats may be surprised to learn that despite this fact, Japan is a cash-based society, and there are some strange idiosyncrasies that expats should be aware of.

Almost all transactions are done in cash, but ATMs are not open after 11PM or over the weekends (although there are some 24-hour ATMs in convenience stores which charge per transaction).  Credit cards must be paid off in full at the end of each month. Luckily, it is quite safe to walk around with a considerable amount of cash on you, although the usual precautions should always be taken. The local currency is the yen and it is currently the strongest currency on the market.
 

As an expat, you will be able to open a bank account quite easily at any of the local banks once you have your gaijin, or alien registration, card. This card clarifies that you are not a temporary visitor in Japan, and that you have a valid address. You must bring the original to open an account, no copies will be accepted.

It may also be necessary to bring your passport depending on which bank you choose.

It is highly recommended that you get a hanko, an official stamp with your name in characters, before you open your account. In Japan, the hanko is the equivalent to a Western signature and it will make your life much easier. Debit orders are frequently rejected because the signature on the permission form does not match the signature on the bank’s records exactly.

Ask around, as not all the banks have English-speaking staff or English options on their ATMs. If you are located outside of Tokyo it is helpful to write down the important characters in order to be able to use the ATM.

Do not bring foreign bank cheques – they do not exist in Japan and you will struggle to cash them. There is 0% interest on normal bank accounts.
 
It is fairly easy to send money overseas via telegraph transfers either at your bank or at the Post Office.
 

You will be required to pay two types of tax while in Japan – income tax, which is usually worked out as a percentage of your salary (ranging from 5% to the maximum 40%), and the annual resident tax, which depends on where you live. The resident tax - shinminzei - is worked out on an annual basis and is only applicable if you live in Japan for longer than a year.

If you intend to stay in Japan for a few years it is wise to factor this into your savings, as it can be a hefty amount. It is also a good idea to see a tax advisor on arrival in Japan, as the tax system is quite complicated and there might be a treaty between your country and Japan which could affect the taxes you must pay.