What is Furusato Nozei?

What is Furusato Nozei
This is a system you can make use of to donate money to a town or city in a
certain prefecture of Japan and in return, you get a residence tax exemption
the next year that is equivalent to the amount of your donation (minus 2,000 yen).
Although Furusato Nozei is NOT considered a tax-cutting strategy but more of a
“tax paid-in-advance” system, the greatest benefit of Furusato Nozei is –
depending on how much money you donate, you get a number of gifts of your
choice ranging from daily necessities such as rice or toilet paper to local
delicacies as tempting as scallops, high-grade beef or expensive fruit.
From the Japanese government’s point of view, this system also helps
redistribute taxes more evenly considering the decreasing population in some
rural areas in the country.

How is Furusato Nozei a good deal compared to regular shopping?

Depending on your annual income in the preceding year, each person gets a
different limit as to how much they should donate. As long as you donate within
the limited amount, the residence tax exemption you get the following year will be
your donated amount minus 2,000 yen. This means that you only need to pay
2,000 yen in exchange for a variety of items that are worth more than that!
If it sounds difficult to understand, let me explain by drawing on my own
experience of using this system. So far this year, I have made two donations that
added up to a total of 19,000 yen. As I wanted to use this system to save money,
I donated to two towns in Chiba prefecture (which I also wanted to support
financially) that are famous for their rice production. In return, I received 4 bags
of rice – each weighing 5 kilos. Imagine going to the supermarket to get 4 bags
of rice of the same weight – that would have cost more than 2,000 yen! I haven’t
used up my limit yet, so I can keep donating in exchange for more gifts I want to
get, providing that I only use up to my donation limit.
So far I have only used Furusato Nozei to cut down on my daily expenses, as I
need to eat rice anyway. However, I know some friends who do it in exchange
for high-end, local delicacies that they don’t normally eat – like crab from
Hokkaido or Kobe beef. So, you can also view this system as a way to enrich
your life as well if you are a foodie.

Where can I get the gifts?

You can do Furusato Nozei through more commonly known websites such as
“Rakuten” or “Satofuru”. The first time I made a donation, I used “Satofuru” and
I remember there was a page that helped me do a simulation of my donation limit
by filling out information such as my annual income made in the previous year.
To get a residence tax exemption, let’s not forget to file our taxes, aka

Kakutei Shinkoku

One thing that should not be forgotten is, you must file your income taxes the
year after you make a donation regardless of whether you are a full-time
employee or self-employed. For full-time employees who donate to no more than
five municipalities, there is no need to file your income taxes as long as you
select the “One Stop” system when doing your shopping online. They will send
you a document for each donation made and make sure you attach your My
Number card copy and send it by post before the stated deadline to the
Disclaimer: As I am not a tax accountant, the information above was to share
my experience only. Please make sure you consult a tax accountant for the
most accurate information before you make a decision of trying out this system.