Social Security Contributions

We see many foreign companies in Japan accrue social security contribution on a monthly basis. But on the contrary, social insurance office provides contribution statement after service is provided. Which means invoice for social security is always 1 month behind. Due to such cultural unique situation in Japan, many companies, unless public, will recognize contribution on cash basis.

Under income tax purposes, expense is not deductible unless contractual obligation confirmation between the 2 parties has been made in a form of invoice for example. As a result if you have accrued bonus and its social insurance, regardless of how the bonus is treated, the accrued social insurance portion is not subject to deduction for income tax purposes.