If withheld income tax is not paid by the due date, additional tax for non-payment is imposed separately from the principal tax. It is provided for in Article 67 of the Act on General Rules for National Taxes.

This article is a roadmap for accountants and business owners who have realized a delay in withholding tax payments, helping them determine what to do right now and how much they can reduce the burden.

It is about the side that withholds and pays on behalf of others, not the side that pays directly.

Additional tax for non-payment applies to national taxes collected by withholding or similar means. Article 2 of the Act on General Rules for National Taxes defines these as “income tax subject to withholding and international tourist tax subject to special collection as prescribed in Article 2, Paragraph 1, Item 7 (Definitions) of the International Tourist Tax Act (excluding ancillary taxes relating to these taxes).”

The issue is not understatement of your own tax, but failure to remit tax collected from others to the government by the deadline. Unlike additional tax for understatement or failure to file, it therefore focuses on late payment, rather than whether a return was filed.

When is the statutory payment deadline?

As for withholding income tax on salaries and the like, pursuant to Article 183 of the Income Tax Act, the deadline is by the 10th day of the month following the month in which the collection was made.

If an office or similar facility with consistently fewer than 10 employees receiving wage payments has received approval from the competent district tax director, under the special provision for tax payment stipulated in Article 216 of the Income Tax Act, the period from January to June is due by July 10, and the period from July to December is due by January 20 of the following year. Whether or not this approval has been granted changes the determination itself of whether a payment is delayed.

The rate is 10%. If paid voluntarily, it is 5%

Paragraph 1 of Article 67 stipulates that an amount calculated by multiplying the tax amount related to a tax notice or the tax amount paid without receiving a notice after the statutory payment deadline by 10% shall be collected.

Under Article 67, Paragraph 2, if payment is made after the statutory payment deadline without receiving a notice, and that payment was not made in anticipation of receiving such a notice due to an investigation regarding the national tax in question, the penalty tax rate is reduced to 5%. The dividing line is whether you paid on your own before receiving contact from the tax office.

It may not be imposed if paid within one month.

Article 67, Paragraph 3 provides an exemption. Paragraph 1 does not apply if the payment falls within Paragraph 2, is made in “circumstances specified by Cabinet Order as indicating an intention to pay by the statutory payment deadline,” and the withheld or similarly collected national tax is paid by the date one month after the statutory payment deadline.

This is the first provision to check when you discover a missed payment. Whether the payment falls within the one-month window affects whether the rate is 10%, 5%, or zero. The circumstances specified by Cabinet Order must also be checked.

Where a justifiable reason is recognized

There is a proviso in Paragraph 1 of Article 67, which states: "This shall not apply, however, in cases where it is recognized that there is a legitimate reason for failing to pay the national tax pertaining to the said notification or payment by the statutory due date."

Rather than being a rule automatically determined solely by the simple fact of delayed payment, the provision establishes an entry point to contest the existence of a justifiable reason within the text of the statute.

If there is concealment or disguise, it is replaced with a heavy additional tax.

If a taxpayer conceals or disguises all or part of the facts and fails to pay by the statutory payment due limit based on that, heavy additional tax of 35% will be collected in lieu of the non-payment additional tax pursuant to Article 68, Paragraph 3. This excludes cases where the proviso of Article 67, Paragraph 1, Paragraph 2, or Paragraph 3 applies.

For repeated noncompliance, a further 10% is added under Article 68, Paragraph 4.

When liability arises and the minimum amount charged

Liability for additional tax for non-payment arises when the statutory payment deadline passes (Article 15). By comparison, liability for additional tax for understatement or failure to file arises when the statutory filing deadline passes.

Fractions of less than 10,000 yen of the tax amount serving as the basis for calculation are rounded down, fractions of less than 100 yen of the finalized additional tax amount are rounded down, and if the total amount is less than 5,000 yen, the entire amount is rounded down (Articles 118 and 119). The tax item is the same as the principal tax (Article 69).

In addition, delinquent tax will be charged separately for the period that payment is delayed.

Common practical questions

Common situations involve finding out later that executive bonuses or payments to contractors were actually subject to withholding tax. In these cases, the payment deadline has already passed and they do not fit into the one-month window. Since the payment deadline shifts depending on when the payment is deemed to have been made, please organize the facts regarding the payment before consulting with us.

For the broader framework, see our overview of ancillary taxes.

Legal basis

• Article 2, Items 2 and 4 of the Act on General Rules for National Taxes (Definitions)
• Article 15, Paragraph 2, Item 15 of the Act on General Rules for National Taxes (Establishment of Tax Liability and Determination of Amount of Tax Payable)
• Article 36, Paragraph 1 of the Act on General Rules for National Taxes (Notice of Tax Payment)
• Paragraphs 1 through 3 of Article 67 of the Act on General Rules for National Taxes (Additional Tax for Non-Payment)
• Article 68, Paragraphs 3 and 4 of the Act on General Rules for National Taxes (Heavy Additional Tax)
• Article 69 of the Act on General Rules for National Taxes (Tax Items Subject to Additional Taxes)
• Article 118, Paragraph 3 of the Act on General Rules for National Taxes (Rounding of Fractional Numbers for Tax Bases of National Taxes, etc.)
• Article 119, Paragraph 4 of the Act on General Rules for National Taxes (Rounding of Fractional Amounts of Established National Tax, etc.)
• Article 183, Paragraph 1 of the Income Tax Act (Obligation of Withholding Income Tax)
• Article 216 of the Income Tax Act (Special Provisions for the Due Date of Payment of Income Tax Pertaining to Withholding)

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