Is Social Insurance Mandatory for Foreign Entrepreneurs in Japan?

Hi, my name is Taisei Koshida, and I am a certified public accountant and tax accountant.

I aim to assist non-Japanese business owners who struggle with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.

If you are unclear about social insurance in Japan, you might find this blog helpful.

Types of Social Insurance in Japan

First, there are health insurance and pension insurance in Japan. Health insurance covers seventy percent of medical bills in case of illness, paid by the Japanese government. Pension insurance provides a pension from the government after the age of sixty. Furthermore, there are labor insurance and unemployment insurance. Labor insurance covers injuries sustained while at work. Unemployment insurance provides payments during periods of unemployment.

In Case Foreigners Establish Corporations

When foreigners establish corporations such as a stock company in Japan, even if it is a single-owner company, the company is required to enroll in health insurance and pension insurance. The insurance premiums are shared equally between the company and the individual, each responsible for approximately fifteen percent of the executive compensation.

In Case Foreigners Run a Sole Proprietorship

When foreigners operate a sole proprietorship in Japan, they need to individually enroll in the National Health Insurance and National Pension. These are different systems from the health insurance and pension insurance referred to above in the description of a company. The contribution rate for National Health Insurance varies based on income. The premium for the National Pension is uniformly about 16,000 yen per month.

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