Notice to Pay Next Year's National Tax in Advance

[ikevinjp]

I have just received a notice from the National Tax Department that I have to pay tax in advance for next year. It is called [平成２４年分所得税の予定納税額の通知書]. It says that anyone who pays more than \150,000 per year in annual tax by tax returns filings [確定申告] will be hit by this notice.

I find that it is a bit ridiculous that I have to pay tax in advance. What happens if I just ignore it - until next year's tax reporting and pay whatever amount due by March 15?

[Morton]

It's not actually in advance. Basically your paying it four months late, three times a year, as opposed to 12 months late.

[TJrandom]

It's not actually in advance. Basically your paying it four months late, three times a year, as opposed to 12 months late.

True.

And - think of it this way... When you file in the beginning of the year - you are actually only doing a "true-up" and paying any additional taxes due, or receiving a refund for taxes overpaid. The company that has paid you income - has already been paying those taxes on your behalf, having deducted it from your earnings.

[Super Grover]

Are you guys sure?
Being deliberately vague, yet factual: I know someone who has a fair bit of money in a place. The return on the money that he has in the place is entirely predictable. The NTA has demanded that he pre-pay (there is no difference between pre-pay and pay!!) his tax on this money. This is what he has said, I have not seen the actual letter sent to him. When I heard this, I could not believe it.

[Morton]

Actually I'm (probably) wrong.


I was thinking of myself. I'm someone who generally earns the same ball park figure every year. I pay tax 3 times a year and then either pay more or get a rebate the following year. I suppose if you earn nothing or a low amount you are paying tax that you shouldn't. I guess when I quit work I'll have to pay tax on money I haven't earned and then wait for my rebate.

[TJrandom]

... What happens if I just ignore it - until next year's tax reporting and pay whatever amount due by March 15?

In my letter/bill - enclosed was an 8 page tax guide. In section IV.2 (bottom of page 4) is a chart that lists the penalty interest due on late payments. The first payment is due by 7/31 - and the interest rate starting on 8/1 is 4.3%pa and increases to 14.6%pa on 1st October. The second payment is due on 30 November - and the interest rate on it, starting on 1st December is 4.3%pa, going to 7.3%pa on 1st January, and then 14.6%pa on 1st February.

So regardless if it is a pre-pay or not, I would not willingly miss those deadlines.

[Super Grover]

In my letter/bill - enclosed was an 8 page tax guide. In section IV.2 (bottom of page 4) is a chart that lists the penalty interest due on late payments. The first payment is due by 7/31 - and the interest rate starting on 8/1 is 4.3%pa and increases to 14.6%pa on 1st October. The second payment is due on 30 November - and the interest rate on it, starting on 1st December is 4.3%pa, going to 7.3%pa on 1st January, and then 14.6%pa on 1st February.

So regardless if it is a pre-pay or not, I would not willingly miss those deadlines.

COMPLETELY AGREE!! You can work through any troubles this year (proactively with an accountant if need be), but NEVER get in a spat with them.

[ikevinjp]

In my letter/bill - enclosed was an 8 page tax guide. In section IV.2 (bottom of page 4) is a chart that lists the penalty interest due on late payments. The first payment is due by 7/31 - and the interest rate starting on 8/1 is 4.3%pa and increases to 14.6%pa on 1st October. The second payment is due on 30 November - and the interest rate on it, starting on 1st December is 4.3%pa, going to 7.3%pa on 1st January, and then 14.6%pa on 1st February.

So regardless if it is a pre-pay or not, I would not willingly miss those deadlines.

Well, I'm re-examined the so-called tax guide and saw that it is true. I assume that if they can charge interest, it is required by law to pre-pay taxes.

Does anyone know of any other countries requiring their citizens to pre-pay their taxes (whether if they earn over a certain amount)?

[iago]

Well, I'm re-examined the so-called tax guide and saw that it is true. I assume that if they can charge interest, it is required by law to pre-pay taxes.

Does anyone know of any other countries requiring their citizens to pre-pay their taxes (whether if they earn over a certain amount)?

The assumption is that you're paying tax on money you've already earned.

The majority of salaried employees have tax deducted at source, and therefore -- by this definition -- are "prepaying" their tax. In Japan and most other countries.

If you don't have tax deducted at source and are expected to pay tax over a certain amount, then NTA asks you to make provisional tax payments as you've found.

If the provisional payments being demanded are totally out of line with what you expect to earn this tax year, you can ask to have the provisional payment amount reduced.

If all your income "appears" at the end of the year, so you're being asked to pay tax on money you haven't received yet, you may be able to talk to the tax office about this.

(I believe most tax authorities consider the tax to be owed the instant the money is received, so it's not really pre-payment unless you haven't earned the money yet...)