Furusato Nozei is a tax program in Japan that lets you donate to other municipalities. Those municipalities in exchange give you “gifts” as thanks. Additionally, the government will reduce the amount you donated from your next year’s taxes.
Disclaimer: I am not a tax professional; therefore, any advice or instructions you take based on this is at your own risk.
Why should I do this?
There are towns and villages in Japan with a shrinking population of working adults. These workers, who would be the ones paying taxes to the local area, move away and pay taxes to larger cities.
In an effort to redistribute funds back into these areas with less financial support, this program was born. Using this program means you can support these small areas even if you live in a big city.
Will my taxes be reduced?
In principle, your tax isn’t reduced. You are simply paying your taxes in advance in the form of donations to areas in Japan with a low number of tax-paying residents.
Is Furusato Nozei free?
No. It cost 2,000 yen each year.
How do I use Furusato Nozei?
There are 2 ways to do this:
- One Stop (ワンストップ特例制度)
- You can only use this if you company does your taxes called the Nenmatsu Chousei (年末調整).
- Kakutei Shinkoku (確定申告)
- You submit your forms between February and March.
One Stop is the easiest method between the two above. This guide focuses on how to apply using the One Stop method.
What are the steps to the One Stop System?
There are 4 basic steps.
- Do the donation simulator.
- Buy gifts by December 31st.
- Wait for the One Stop form and certificates from the town
- Submit the One Stop form by January 10th.
Step 1: Donation Simulator
You first need to calculate how much taxes you can donate (in other words, prepay). There are 2 types of donation simulators you can use: basic or advanced.
There are several sites with their own calculators. I recommend using them all and taking the average estimate.
According to this basic calculator, if I made 6 million yen a year, I can donate 77,000 yen. The general rule is the more you make, the more you can donate.
Step 2: Buy Gifts
This is the fun stepー buying gifts with your tax donation by December 31st.
You can find everything from seafood to tent equipment. If you don’t know what you want, you can go on sites like this that rank the most popular gifts.
If you have a Rakuten account, I recommend you buy your gift on Rakuten’s platform as you can get points! You can also find reoccurring gifts, such as 5kg of rice sent to your house for 6 months straight!
Important: When you purchase, remember to check off that you want to use the One Stop system! It may ask you like this, “ワンストップ特例制度の申請書の送付について.” You should select, “希望する.”
Step 3: Forms
After buying your gifts, the local town will send you the prefilled One Stop form and certificates because you selected that you wanted to use the system. Keep the certificates as they state that you donated to the city! You may need them for another time.
If you forgot to select that you want One Stop, it’s okay! You can download the blank form here.
As of February 2022, you need to complete the form by:
- providing copies to prove your identification
- confirming your name, address, phone number, and more are correct on the form (pre-filled for you)
- adding your MyNumber ID on the form
- checking off the two boxes
Step 4: Mailing
After filling out the form and getting copies of your identification papers, you need to submit the papers back to the local town by January 10th!
If you’re late by even 1 day, you can’t use the donation as a tax deduction.