The Hometown Tax Donation Program is a system that allows you to donate to a city, prefecture or municipality of your choice and receive a deduction on your income and residential taxes.
In order to claim the benefits, you previously needed to file a Final Income Tax Return, but In April 2015, to make it easier for participants to declare their donation deductions, the Japanese government introduced the One Stop Exemption system.Let’s see how it works!
If you are a salaried employee, and donated to five or less different cities, prefectures or municipalities in the calendar year, you can claim your hometown tax deductions through the One Stop Exemption system without having to make a final incometax return.
However, if you donated to 6 or more cities, prefectures or municipalities, or if you usually file your Income Tax Return every year (i.e. business owners, employees whose total income exceeds 20 million JPY, and those who are applying for homeloan deductions for their first year), you will need to claim your hometown tax deductions through your Income Tax Return.
|Income Tax Return||One Stop Exemption System|
|When||Once a year||Every donation|
|Deadline||Before March 15th every year||Before January 10th of the next year|
|Tax Deduction Amount|
|Refund Method||Refund from your Income Tax + |
Deduction from the remainder of your Residential Tax
|Deduction on your Residential Tax for the next year|
The hometown tax deduction amount is approximately the same for both methods. If you meet the eligibility requirements, we recommend using the easier One Stop Exemption system. If you have experience filing your Income Tax Return and do it everyyear, file for the deduction with your Income Tax Return.
To apply for the One Stop Exemption, submit the Donation Deduction Application Form to the local government you donated to. This application form is usually sent together with the thank you gifts you receive, or at the end of the year. However,it is important to note that some local governments do not provide this application form, and you have to obtain it from the relevant government website.
Following the implementation of the My Number system in 2016, it is necessary to include your My Number in your application. To prevent fraud, applicants are required to provide a copy of a proof of identity document and a My Number confirmationdocument to be submitted with the application. Please refer to the table below for more information.
|If you have a My Number Card||If you have a My Number Notification Card||If you don't have either a My Number Notification Card|
|Identification document||Bank copy of your My Number Card||Copy of your My Number Notification Card||Japanese Residence Record with your My Number|
|My Number verification document||Front copy of your My Number Card||Please provide a copy of one of the following|