Whether you’re operating in, or considering entry into the Japanese market, it’s essential to understand how the My Number system affects HR and payroll.

Earlier this year, Japan’s My Number began to integrate into service delivery and it will peak with year-end tax services, which are now underway.

Background

Introduced by the Japanese government in October 2015, My Number - a 12-digit social security and tax number system - was designed to aid in the efficient, streamlined, and unified delivery of public services, such as social security administration, taxation, and disaster response. My Number also aims to support in the prevention of certain criminal activity, in particular tax crimes and crimes related to inappropriate receipt of public benefits or services.

Impact on HR and payroll

From a payroll perspective, My Number has a significant impact on services, especially on how year-end payroll or tax adjustment (nenmatsu chosei) is to be executed. Business processes, IT systems, client agreements, facility security and access processes have also required review and modification in order to support the My Number year-end activities.

Where companies hire service providers for their payroll, it’s necessary to amend service agreements and provide formal consent in order to allow them to transmit, access and use the My Number information when supporting the companies’ payroll and year-end services.

Payroll service providers can also fulfil their responsibilities by delivering trainings to in-house HR and payroll staff, and help them to comply with the My Number requirements. Companies are also required to modify their payroll systems and facilities to make sure their employees’ data is secure and tightly controlled.