Employment insurance and income tax rates

Employment insurance

Working holiday visa holders do not need to join employment insurance if they work in Japan. This is because the working holiday holder is treated as a ‘non-resident’.

However, in principle, enrolment in other social insurances (employee’s pension insurance, health insurance and workers’ accident compensation insurance) is mandatory.

Some may not be eligible for employee pension insurance or health insurance, but it is important to remember that, basically, you need to join social insurance in the same way as Japanese nationals.


Income tax

It is important to remember that the income tax rate for working holidaymakers is fixed at 20.43%.

Normally, the income tax rate varies depending on the amount of income, as the ‘progressive taxation system’ is applied to Japanese nationals. However, the progressive taxation system does not apply to working holiday residents.

All foreigners on working holiday who cannot stay in Japan for more than one year are treated as ‘non-residents’ and the income tax rate is fixed at 20.43%. Because a fixed income tax rate is imposed regardless of the amount of income, the salary may seem lower than expected.