Japan’s My Number System. Worker Benefits and Employer Obligations.
For several years, Japan has been moving towards the full implementation of the My Number Card System. There have been start-up glitches for which the government has come under criticism. However, it is moving ahead and there are numerous expected benefits for citizens, workers, and employers. A summary of Japan’s My Number System, benefits, and employer obligations follows.
The My Number (マイナンバー) system, in fact, Japan’s Social Security and Tax Number System, is assigned to every resident of Japan, including both Japanese citizens and foreigners. My Number is required when filing tax returns, making tax payments, and conducting other tax-related transactions. The My Number is also used by employers to report employee income and by financial institutions to report some client financial transactions.
Unauthorized disclosure or misuse of My Number information is subject to legal penalties. Unfortunately, there have been privacy breaches and government mistakes already that have caught the attention of the media. Still, as you might guess, Japan has implemented strict privacy protections: personal information generated in the My Number system is securely managed and used only for authorized purposes, such as tax administration and social security services.
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Objectives of the Japanese My Number system
- Administration Efficiencies: Relating to social security, tax, and other public services. With the unique identification number for each resident, the government will streamline administration, reduce duplication, and improve the accuracy and efficiency of data management.
- Enhanced Tax Compliance: The My Number system will enhance tax compliance. It allows the government to accurately link taxpayers’ personal information, income data, and tax records. This will aid in preventing tax evasion, ensure greater tax assessment fairness, and promote tax systemtransparency.
- Improved Service Delivery: The system leads to more efficient delivery of public services through the integration of personal information across various government agencies. The sharing of relevant data between tax authorities, social security agencies, local municipalities, and others will be facilitated, with the goal of more targeted and personalized services to residents.
- Stronger Social Security Systems: The My Number system strengthens the administration of benefits and welfare programs. It allows for better coordination and management of social security information, ensuring that individuals receive the benefits and services they are entitled to.
- Personal Information Privacy: A goal of the My Number system is the protection of personal information. Strict privacy measures are in place to protect the confidentiality and security of individuals’ data, and that the data obtained through the system is used only for authorized purposes: legal penalties are imposed if misused or disclosed without proper authorization.
- Facilitation of Online Services: The My Number system will support the development of online taxpayer and other government services in Japan. It enables individuals to access their tax information, file tax returns, and make tax payments electronically through government platforms like the e-Tax system. Japan’s active efforts in digital transformation enhance convenience, accessibility, and efficiency in tax administration.
General Employer Obligations
Employers have a clear legal responsibility to register staff for the My Number system. These are some of the steps required.
- Collection and Notification of Use. For all existing employees, and when hiring new staff, employers should collect the My Number – a unique 12-digit identification number found on their residence card or other identification documents. Employers must also notify employees of your use of their My Number for tax and social security purposes. You should include details of how their My Number will be used and any privacy policies.
- Record-Keeping and Government Reporting: Employers should keep accurate records of employee My Number information and other employment details. Storing the information securely and ensuring it is protected from unauthorized access is critical. You are obligated under law to report your employees’ My Number and other employment information to the relevant social insurance agency – this allows linking their social insurance records with their My Number.
- Tax Reporting: When employers submit annual tax returns for employees, they must include My Number information to ensure proper identification and accurate tax assessments.
Obligations Regarding Foreign Staff.
Regarding foreigners working in Japan, employers have various obligations including the following.
- Verification of Residence Status: Employers must verify the residence status of foreign employees to ensure they are legally allowed to work in Japan. This includes confirming their visa status, duration of stay, and any applicable work restrictions.
- Tax Reporting and Withholding: When filing tax returns for foreign employees, their My Number must be included in the reporting: of course, as always, you must also correctly calculate and withhold income tax and social security contributions from wages, based on tax residency status and relevant tax treaties with home countries.
- Immigration Laws: In addition to My Number obligations, employers must comply with immigration laws and regulations when hiring foreign workers including verifying and documenting immigration status, reporting changes in employment status, and adhering to any work permit requirements.
Corporate Numbers – It’s Part of the System
Corporate Numbers were implemented in 2015, along with the Individual My Numbers, Unlike Individual Numbers, whose disclosure to the public is punishable, Corporate Numbers are published by the National Tax Agency. Here is the website to access all registered corporations https://www.houjin-bangou.nta.go.jp/en/
The corporate number is a unique 13-digit unique identifier for every Japanese corporation. The NTA (National Tax Agency) assigns the number and makes it public – along with the corporation’s trade name, the address of its head office, or its principal place of business.
The government states the objective of the Corporate Numbers to be:
- Improvement of administrative efficiency via improved management of information, the simplicity of exchanging corporate information, and the efficiency of administrative tasks
- Convenience for Citizens – via the exchange of data among the various administrative offices and simplifying the application process for all corporations
- Creating a fair and just society – through the sharing of information to facilitate the link between payment and functions such as taxation and the social security system
A summary of Japan’s My Number System, benefits, and employer obligations should help employers understand the system and all it entails.