Banking, Money and Taxes in Japan

The Japanese banking system is one of the best and most reliable in the world. Managing banking, money, and taxes in Japan is generally straightforward. Expats have a variety of international and local banks to choose from, making the process of opening an account relatively simple. 

Expats may be surprised to learn that Japan remains a largely cash-based society (although this is gradually changing). Most transactions are conducted in cash, and credit cards are typically reserved for large purchases.

Money in Japan

The local currency is the Japanese Yen, abbreviated to JPY or ¥.

The Japanese Yen is available in the following denominations:

• Notes: 1,000 JPY; 2,000 JPY; 5,000 JPY; and 10,000 JPY
• Coins: 1 JPY, 5 JPY, 10 JPY, 50 JPY, 100 JPY, and 500 JPY

Banking in Japan

Both local and international banks offer a range of services to expats in Japan. The most prominent local banks are Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group. International banks in Japan include HSBC and Barclays.

Opening a bank account

Expats can easily open a bank account at any local or international bank once they have their Zairyu Card (residence card). Expats may also need to bring their passports and visas, but this varies depending on the bank.

It's highly recommended that expats get a hanko (an official stamp with their name in characters) before opening a bank account. In Japan, the hanko is the equivalent of a Western signature, and it will make life much easier.

Not all banks have English-speaking staff or English versions of their services, such as online banking. Expats should shop around to find the best bank suited to their particular needs.

ATMs and credit cards

ATMs can be found easily, especially in big cities. However, if located outside of Tokyo, machines might not have English options, so it's helpful to write down the important characters to be able to use the ATM.

Japan remains a largely cash-based society and credit cards are not a popular means of payment. Nevertheless, credit cards are accepted at most large hotels, restaurants, and retailers.

Taxes in Japan

Expats will be required to pay two types of tax while in Japan – income tax, usually worked out as a percentage of one's salary (ranging from 5 to 45 percent), and the annual resident tax, which depends on where an expat lives. The resident tax is worked out every year and is only applicable if living in Japan for longer than a year.

Several factors determine a person's tax residency status. Permanent residents are liable for tax on their worldwide income, while non-permanent residents are taxed on their Japanese income and foreign income paid into Japan. Non-resident taxpayers are only liable for tax on their income earned in Japan.

It's a good idea to consult a tax advisor upon arrival in Japan, as the tax system is quite complex and can change at short notice. There might also be a treaty between your home country and Japan, which could affect the taxes payable.