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Understanding Japan’s Tax and Reporting Rules for OFW Remittances (2025 Guide)

by Pritz Mirafuentes

Sending money home is one of the top priorities for Overseas Filipino Workers (OFWs) in Japan. Whether it’s for family expenses, investments, or savings, remittances represent years of hard work and sacrifice.

But did you know that Japan has specific tax and reporting rules when you send money abroad? Knowing these can help you avoid legal issues, unnecessary fees, and delays — and ensure every yen you earn reaches your loved ones safely.

Why Japan Monitors Remittances

Japan strictly regulates money transfers to prevent money laundering, terrorism financing, and tax evasion. All international remittances are monitored under Japan’s Act on Prevention of Transfer of Criminal Proceeds.

That means :

Every time you send money to the Philippines, the bank or remittance center must report the transaction to Japanese authorities if it exceeds certain limits.
You may be asked to show identification (My Number Card, residence card, or passport) to verify your identity and purpose of the remittance.

Good News : For ordinary OFWs sending money home to family, these transactions are legal and normal — as long as they’re properly documented.

Tax Rules : Are OFW Remittances Taxed in Japan?

In most cases, remittances to the Philippines are not taxed in Japan if the money comes from your already taxed income or salary.

However, there are important distinctions to remember :

1. Your Income Is Taxed, Not the Remittance

If you are working legally in Japan, your employer automatically deducts income tax (shotoku-zei) and residence tax (jumin-zei).

Once your income has been taxed, you are free to send that money abroad — the remittance itself will not be taxed again.

2. Large Transfers May Be Reported

If your single transaction or total remittances exceed ¥1 million (about ₱380,000), the bank or money transfer service must report it to the Japanese tax authorities.

This doesn’t mean you will be taxed — it’s simply part of financial transparency requirements.

3. Gift Tax Rules

If you’re sending money to a relative in the Philippines as a gift, Japan generally doesn’t impose a tax since the recipient is outside Japan.

But if the recipient lives in Japan (for example, a dependent or spouse), then large gifts could be subject to Japanese gift tax depending on the amount.

Reporting Requirements for OFWs

To comply with Japanese financial regulations, you should :

Use licensed remittance providers only.

Services that are registered under the Financial Services Agency (FSA).

Provide accurate sender and receiver information.

Always use your full legal name and the recipient’s real details.
Avoid using “proxy” or middleman accounts — these could raise red flags.

Keep receipts and transaction records.

Maintain at least 1–2 years of records of your remittances.
These can help if Japan’s tax office or your local city hall requests proof of income use.

Declare large transfers when asked.

If authorities or your bank request an explanation for high remittances, simply show payslips or employment certificates as proof that the funds came from legal income.

How the Philippines Treats Your Remittances

From the Philippine side :

Remittances from OFWs are tax-exempt under Philippine law (Republic Act No. 10022).
However, exchange rate and bank charges apply depending on your chosen service.

Tip : Encourage your family to keep remittance receipts. These documents are often required when applying for housing loans, scholarships, or small business grants from OFW support programs.

Tips to Stay Compliant and Safe

Always remit through licensed and reputable financial institutions.
Avoid carrying or sending large cash amounts through informal channels.
Keep digital copies of receipts and money transfer records.
Never let others use your account for “padala” — this can be flagged as suspicious activity.
Stay updated on new rules from the Japan Financial Services Agency (FSA) and Philippine Embassy in Tokyo.