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Social Insurance in Japan

Enrollment in Social insurance is necessary in Japan

Calculation of Social Insurance Premium

How does your company pay for social insurance in Japan ?

Taxes, etc. on a salary of 5,000,000 yen(額面) received by you in Japan

Enrollment in Social insurance is necessary in Japan

In the case your company hires employee (not part time employee)in Japan, it needs to pay several kind of cost, including social insurance.

” Social Insurance = Shakai Hoken = しゃかいほけん = 社会保険 “

If your company apply for shakaihoken, your company and employee need to pay some amount to government. 

It is a kind of taxation in Japan.

Social insurance includes Employee’s Health Insurance (Kenko hoken) and Employee’s Pension (Kosei Nenkin).

And when your employee goes to hospital, a part of medical expense can be paid by government. It is Employee’s health insurance.

This is called “Kenko hoken.” Kenko hoken is different from Kokumin kenko hoken.

In the case of self employee, student, they can join Kokumin Kenko Hoken = こくみんけんこうほけん = Kokuho = こくほ。

And your employee can receive pension in the future. Employee can join Employee’s pension = Kosei nenkin = こうせいねんきん. 

In the case of self employee, student, they can join Kokumin Nenkin = こくみんねんきん。

Social insurance includes these “kenko hoken” and “Kosei Nenkin“.

Other than Social insurance, there is a labor insurance (Rodo Hoken). 

Labor Insurance (Rodo Hoken) includes employee’s  accident compensation insurance (Rousai hoken) and unemployment insurance (koyou hoken).

 Social InsuranceLabor insurance 
 Employee’s health insurance (About 10%)Employee’s pension
(About 18%)
Employment insurance
(About 0.9%)
Accident compensation insurance (About 0.3%)
Content of supportMedical expense supportPensionSupport in UnemploymentAccident compensation
Proportion paid by employeeAbout 5% of salaryAbout 9% of salaryAbout 0.3% of salary0
Proportion paid by employerAbout 5% of salaryAbout 9% of salaryAbout 0.6% of salaryAbout 0.3 % of salary

Calculation of Social Insurance Premium 

Assumed that a company (import and export business in Miyagi prefecture) pays monthly salary of 240,000 yen to an employee (42 years old).

Rate of social insurance premium differs depending on Prefecture, Category of business, age of employee and it is sometimes changed by government.

Health insurance : 240,000 * 11.85% / 2 = 14220 yen is paid by employee.
                                  240,000 * 11.85% / 2 = 14220 yen is paid by employer.

Employee’s pension : 240,000 * 18.3% / 2 = 21960 yen is paid by employee. 
                                       240,000 * 18.3% / 2 = 21960 yen is paid by employer.

Employment insurance : 240,000 * 0.3%  = 720 yen is paid by employee.
                                              240,000 * 0.6%  = 1440 yen is paid by employer.

Accident Compensation Insurance : 240,000 * 0.3%  = 720 yen is paid by employer.

So the employee will receive 240000 – 14220 – 21960 – 720 = 203100 yen. 

How does your company pay for social insurance in Japan ? 

If you are operating your business in Japan and going to hire an employee, you need to take necessary process relating to Social Insurance and Labor Insurance.

In the case you operate your business in Japan, you may need to know how to calculate corporation tax, resident tax. So you can refer to this page. “Corporation tax, Income tax of director and Social-insurance tax.

Taxes, etc. on a salary of 5,000,000 yen(額面=Gakumen) received by you in Japan

Income Taxes 138,800 yen

Inhabitant tax(住民税)246,300 yen

Employees’ pension(厚生年金, Not 国民年金) 450,180 yen

Health insurance(健康保険, Not 国民健康保険) 241,326 yen

Unemployment insurance(雇用保険=失業保険)25,000 yen

Take-home pay(手取り)3,898,394 yen

So, you will receive only 3,898,394 yen.

These amounts depend on your age and whether you have dependents(扶養親族).

Regarding Social Insurance Premiums and Japanese Accounting Books, you can see this page, too.