Written by Masahiro Fukai , US CPA/ Realtor
Corporate lease contract can reduce tax of both a company and its employees. If a company wants to retain good staff, the company should consider a cooperate lease contract as company housing for staffs.
In case of a cooperate lease contract the following taxes can be reduced.
(For employees)
(1) Withholding tax (Gensenchoshuzei)
Withholding tax is a national tax which is deducted from monthly salary. Since a company pays the monthly rent to the owner, his salary would be decreased. So the withholding tax is reduced.
(2) Local income tax (Juminzei)
Local income tax is also an item which is deducted from monthly salary. In the same way as the above withholding tax, local income tax is also reduced.
(3) Contribution to social insurance (Shakaihokenryou)
The main contributions to social insurance in Japan are ①Health insurance tax (Kenko Hokenryou), ②Employee pension premium(Koseinenkin hokenryou).
(For companies)
(4) Corporate Tax
Since companies pay monthly rent for employees, the expense of income statement will increase. So the corporate tax decreases.
On the other hand in case a company provides housing allowance to employees, the total amount of salary increases. Therefore the above (1) (2) (3) increase.
Corporate lease contract demands nothing. The only one thing is the firm’s accounting workload. However it is not so hard work. Whether or not a company can deal with a corporate lease contract and reduce taxes is essentially a matter of practice.
By adopting a corporate lease contract the firms can enhance the satisfaction level of their employees and so they would always lure high quality people.