Furusato Nozei "Hometown Tax"

1/25/2023

Furusato Nozei is a kind of donation out of income tax that people offer to the local or prefectural governments of their choice, and in response, municipalities repay the donors’ generosity by sending them "thank you gifts". In most cases, the gifts are local specialties.

Foreign residents who work and pay taxes in Japan, can also participate in Furusato Nozei program and receive gifts in return for their donations.

If you live in Japan, you know that paying high taxes is a part of life. But if you had the option of either:

A) pay taxes and receive nothing in return, or
B) pay the same taxes and receive gifts

Which do you prefer? If you chose option B and would like to receive gifts, you need to know about Furusato Nozei.

What is Furusato Nozei "Hometown Tax"?

The Furusato Nozei is essentially a system that allows you to redirect a portion of your income and resident taxes to any village, town, or city that you would like to help out. By doing this, you are supporting the development of smaller, less-funded municipalities, and as a thank you, the beneficiary sends you a gift. You can choose the gift from the list of products they offer.

The hometown tax program gives a chance to Japanese residents who are living in places other than their hometowns and provides them a way to give back to their communities.

As a foreign resident in Japan, it’s an opportunity to discover the country without leaving your house. You will find goods that would be difficult to find in big cities without ordering from farmers directly. While you receive premium items in exchange for a small portion of your tax money, you are helping independent labels stay in business—brands that you might like to continue supporting in the future.

Gifts can be anything from rice to seafood to seasonal fruits to handicrafts to getting discounts on hotels and inns. Typically, the gift is tied to the region—for example, Hokkaido king crabs. When sending donations to producers that make particularly seasonal goods, certain packages may take a few months to arrive.

How Furusato Nozei Works?

The way the hometown tax system works in practice is as follows:

You need to determine how much you are eligible to donate
Select the gifts you want or the region you wish to support
Make a donation to a chosen municipality and receive the promised gift
Claim the donation as a tax deduction via your tax return

There is a fee of 2,000 yen (once annually, not per donation) for participating in Furusato Nozei. This is not paid directly, but handled during the calculation of the tax deduction.

1 - To determine your donation limit, you can use the online Furusato Nozei calculator. The deductible tax amount depends on your annual income and family structure. Fill in your salary range, family structure, and other required details in the tax payment simulator to get your tax deduction amount.

2 - You can choose which city or cities you want to donate to and how much. You can make multiple donations to different areas or different projects throughout the year.

3 - Make a donation and receive the goods. Some contributions can be as low as 10,000 yen, while others are as high as 500,000 yen or more.

4 - You need to keep the receipts that you receive from the municipalities that you donated to. When you report your income tax return, apply for the tax deduction and include the receipts as proof of donation.

Furusato Nozei One Stop Exemption System

If you are a salaried employee and do not plan to donate to more than five municipalities in a single calendar year, you can use the One Stop Exemption System.

The One Stop Exemption System makes it easier by allowing for donations to be credited against future residential tax payments for the following year; it is processed every time you make a donation.

You need to mail the One Stop application form to the municipality you donated to by January 10th of the following year. A copy of your MyNumber Card or a copy of an ID that has your photo and your MyNumber on it should be included. Click here to view a sample of the One Stop Application.

you can download the One Stop application from Ministry of Internal Affairs and Communication website.

For frequently asked questions about Furusato Nozei and the One-Stop Exception System, visit the Ministry of Internal Affairs and Communication.

Some of the Furusato Nozei websites where you can select your gifts are listed below. There are several Halal certified items on the list: