Local Tax Act

Where a person under Article 294, paragraph (1), item (i) receives payment of severance pay or other such compensation (limited to that for which the income tax is to be collected and paid pursuant to Article 199 of the Income Tax Act; the same applies hereinafter in this Subsection), the income levy on that severance pay or other such compensation is, notwithstanding Articles 313, 314-3 and 318, imposed, with the income pertaining to that severance pay or other such compensation separated from other income and as prescribed in this Subsection, by the municipality of the place of domicile of that person as of January 1 of the year in which the day on which that severance pay or other such compensation is to be received falls.

The tax base of the separately taxed income levy is the amount of retirement income for that year.

The amount of retirement income referred to in the preceding paragraph is calculated in the same manner as the calculation of the amount of retirement income prescribed in Article 30, paragraph (2) of the Income Tax Act.

The tax rate of the separately taxed income levy is six percent.

With regard to the collection of the separately taxed income levy, a municipality must use the method of special collection.

When a municipality intends to collect the separately taxed income levy by the method of special collection pursuant to the preceding Article, it must designate, by the Municipal Ordinance of that municipality, a person who pays severance pay or other such compensation to the person liable for tax for that separately taxed income levy (including a person who pays severance pay or other such compensation in another municipality) as a special collection agent, and have that agent collect it.

The special collection agent under the preceding paragraph is obliged, when paying severance pay or other such compensation, to collect the separately taxed income levy on that severance pay or other such compensation, to submit to the mayor of the municipality, by the 10th of the month following the month containing the day of that collection, in the form specified by Order of the Ministry of Internal Affairs and Communications, a remittance return stating the amount of the tax base and the tax amount of the separately taxed income levy to be collected and other necessary particulars, and to remit the remittance to that municipality.

The provisions of Article 321-5, paragraphs (4) and (5) and Article 321-5-2 apply mutatis mutandis to the case where, pursuant to the preceding paragraph, the remittance referred to in that paragraph is remitted. In this case, the phrase "salary paid" in Article 321-5-2, paragraph (1) is deemed to be replaced with "severance pay or other such compensation paid", "remit" with "file and pay in", and "paragraph (1) of the preceding Article" with "Article 328-5, paragraph (2)".

The amount of the separately taxed income levy to be collected pursuant to paragraph (2) of the preceding Article is the tax amount set forth in each of the following items in accordance with the classification of cases set forth in that item.

in the case where the return under paragraph (1) of the following Article submitted by the person receiving payment of severance pay or other such compensation (hereinafter in this Article, paragraphs (2) and (3) of the following Article and Article 328-8 referred to as the "retirement income return") contains a statement that there is no other severance pay or other such compensation that was finalized as payable in the year in which the payment of that severance pay or other such compensation became finalized and that has already been paid (referred to as "other severance pay already paid" in the following item): the tax amount calculated by applying the provisions of Articles 328-2 and 328-3 to the amount of the severance pay or other such compensation to be paid;

in the case where the retirement income return submitted by the person receiving payment of severance pay or other such compensation contains a statement that there is other severance pay already paid: the tax amount equivalent to the remainder obtained by deducting, from the tax amount calculated by applying the provisions of Articles 328-2 and 328-3 to the total of the amount of that other severance pay already paid and the amount of the severance pay or other such compensation to be paid, the amount of the separately taxed income levy that was collected or is to be collected pursuant to paragraph (2) of the preceding Article with respect to that other severance pay already paid.

If the person receiving payment of severance pay or other such compensation has not submitted a retirement income return by the time of receiving that payment, the amount of the separately taxed income levy to be collected pursuant to paragraph (2) of the preceding Article is the tax amount calculated by applying the provisions of Articles 328-2 and 328-3 to the amount of the severance pay or other such compensation to be paid.

In the calculation of the retirement income deduction under Article 30, paragraph (2) of the Income Tax Act where the provisions of Article 328-2 are applied pursuant to the items of paragraph (1) or the preceding paragraph, it is to be made according to the circumstances at the time when it was finalized that the severance pay or other such compensation from which the separately taxed income levy is to be collected under the preceding two paragraphs is to be paid.

The provisions of Article 202 of the Income Tax Act apply mutatis mutandis to the case where the provisions of the preceding three paragraphs are applied.

A person receiving payment of severance pay or other such compensation must, by the time of receiving that payment, submit a return stating the following matters, via the payer of that severance pay or other such compensation, to the mayor of the municipality of the place of domicile as of January 1 of the year in which the day on which the severance pay or other such compensation is to be received falls. In this case, when submitting a return stating that there is other severance pay already paid as prescribed in item (ii), the person must attach to that return the special collection record issued pursuant to Article 328-14 with respect to that other severance pay already paid.

the name of the payer of that severance pay or other such compensation;

whether there is other severance pay already paid as prescribed in paragraph (1), item (i) of the preceding Article, and, if there is such other severance pay already paid, whether that other severance pay already paid falls under general severance pay or other such compensation prescribed in Article 30, paragraph (7) of the Income Tax Act, short-term severance pay or other such compensation prescribed in paragraph (4) of that Article, or specified officer severance pay or other such compensation prescribed in paragraph (5) of that Article, and its amount;

the years of service forming the basis for calculating the retirement income deduction prescribed in paragraph (3) of the preceding Article;

whether that person falls under the case listed in Article 30, paragraph (6), item (iii) of the Income Tax Act and, if so, the relevant fact;

other matters specified by Order of the Ministry of Internal Affairs and Communications.

In the case referred to in the preceding paragraph, when the retirement income return is accepted by the payer of severance pay or other such compensation through whom it is to be submitted, that return is deemed to have been submitted, at the time it was accepted, to the mayor of the municipality prescribed in that paragraph.

If the payer of severance pay or other such compensation through whom the retirement income return is to be submitted has taken measures enabling it to properly receive, by electronic or magnetic means, the provision of the matters to be stated in that retirement income return, and otherwise satisfies the requirements specified by Cabinet Order, a person who receives payment of the severance pay or other such compensation referred to in paragraph (1) may, as provided by Order of the Ministry of Internal Affairs and Communications, in lieu of submitting that retirement income return, provide the matters to be stated in that retirement income return to that payer of severance pay or other such compensation by electronic or magnetic means.

With regard to the application of the provisions of paragraph (2) where the provisions of the preceding paragraph apply, the phrase "the retirement income return is" in that paragraph is deemed to be replaced with "the matters to be stated in the retirement income return are", "accepted by the payer" with "provided to the payer", and "the time it was accepted" with "the time they were provided".

A municipality may, in the case where a person liable for tax for the separately taxed income levy fails to submit a retirement income return without justifiable grounds, establish a provision by the Municipal Ordinance of that municipality imposing a non-penal fine of 100,000 yen or less on that person.

When a remittance return under Article 328-5, paragraph (2) or (3) (hereinafter in this Subsection referred to as a "remittance return") has been submitted, if the amount of the tax base or the tax amount pertaining to that remittance return differs from what the mayor of the municipality has found by investigation, the mayor is to reassess it.

If a special collection agent has not submitted a remittance return, the mayor of the municipality is to determine, by investigation, the amount of the tax base and the tax amount for which a remittance return should be filed.

If the mayor of the municipality discovers by investigation that the amount of the tax base or the tax amount reassessed or determined pursuant to the preceding two paragraphs or this paragraph is excessive or insufficient, the mayor is to reassess it.

When the mayor of the municipality has made a reassessment or determination pursuant to the preceding three paragraphs, the mayor must notify the special collection agent of it without delay.

When a reassessment or determination under the preceding Article has been made, if there is a shortfall amount (meaning the shortfall in the amount of remittance resulting from a reassessment, or the amount of remittance resulting from a determination; the same applies hereinafter in this Article, the following Article, Article 328-12 and Article 329, paragraph (1)), a municipal tax collection official must collect it, with the day on which one month elapses from the day on which notice under paragraph (4) of the preceding Article was given as the due date for payment.

In the case of the preceding paragraph, a delinquency charge equivalent to the amount calculated by multiplying the shortfall amount by a rate of 14.6 percent per annum (7.3 percent per annum for the period up to the due date for payment under the preceding paragraph or the period up to the day on which one month elapses from the day following that due date for payment), in accordance with the number of days in the period from the day following the due date for payment under Article 328-5, paragraph (2) or Article 321-5-2 as applied mutatis mutandis pursuant to Article 328-5, paragraph (3) (or, if the due date for payment was extended, the extended due date for payment) until the day of remittance, must be added to it and collected.

The mayor of the municipality may reduce or exempt the delinquency charge under the preceding paragraph if the mayor finds that there were unavoidable circumstances for a special collection agent having been subject to a reassessment or determination under the preceding Article.