Furusato donation is literally hometown tax which is one of donation taxation system in Japan. This system’s official stance is “taxation” but its substance is “donation”. This system lets people voluntarily pay local tax through donation to a voluntary municipality. This is also called Furusato taxation = “Hometown donation”.
In short, Furusato donation is simply a system that enables you to donate a municipality that you want to support. Donation is not only connected to support regional municipality that has limited financial annual revenue but gives a contributor the right to have a benefit in return as a gift such as speciality local food and products that can be only produced where you donate.
So many people join in this system to expect a return gift from donating municipality.
Contents
- 1 5 reasons that people pay attention to Furusato donation
- 1.1 You can have the right to receive benefit to get a return gift
- 1.2 You can choose Japanese regional municipality that you want to support
- 1.3 Tax refund and tax exemption system when tax returning
- 1.4 You can choose municipality to donate from how your donated money is used by a municipality
- 1.5 There is no limitation of the number of municipalities you can donate
- 2 The system of Furusato donation
- 3 System of one-stop special scheme
- 4 Background of establishment of Furusato donation
5 reasons that people pay attention to Furusato donation
You can have the right to receive benefit to get a return gift
You will receive whatever you want from where you donate in accordance with the amount you donate to the municipality.
However, when we look the website of Furusato donation, it is just like a online shopping that makes us feel buying something there because we want it.
The biggest difference between general online shopping sites and Furusato donation site is its price. The presented prices of products listed on the site are usually much higher price than the market price of products listed on.
Furusato donation is not online shopping system but only donation. So formally, it is not that you buy something through Furusato donation site but you donate money to a municipality that provides what you want to buy indirectly.
You can choose Japanese regional municipality that you want to support
Needless to say, return gifts you can receive are different depending on the region. If you want to eat rich seafoods that capture in north region such as crab meat , sea urchin and scallop, you might have to donate to regional municipality located in Hokkaido, or if you want to authentic Japanese Udon, you might have to donate to a prefecture located in Shikoku area.
The variation of speciality products are very unique in each regions. You just take a look at this site to learn the tendency of what kind of products are provided in what region.
Tax refund and tax exemption system when tax returning
Salaried employees who don’t originally need to do tax return take trouble to do it in order to use the Furusato donation system. But in first April, 2015, “Furusato donation one-stop special scheme” has been established.
If Furusato donation to regional 5 municipalities or less is done by salaried employees who don’t originally need to do tax return (who are pension recipients receiving 4 million yen or less or salaried employees receiving 20 million yen or less anually), people can receive a benefit of tax deduction without doing tax return on the condition of submitting application form on special schemes of each regional municipality.
In this case, income tax cannot be deducted but total amount of deduction that takes income tax amount into consideration can be received in the form of resident tax deduction from the next year.
However, when you donate to 6 municipalities through , this special scheme is not applicable.
You can choose municipality to donate from how your donated money is used by a municipality
If you are such a splendid person who honestly contribute to regional society rather than caring about what kind of return gift can be received, you can also decide to donate by judging from how regional municipality use donated money.
There is no limitation of the number of municipalities you can donate
Even if your purpose of your donation is simply receiving a return gift or your purpose of your donation is purely supporting regional municipality’s financial situation, there is no limitation of the number of regional municipalities you can donate.
The system of Furusato donation
The Furusato donation system is very simple.
- You donate to an organization which represents a reception of municipality.
- An organization send a return gift to you
- Donation acceptance receipt is sent to you
- You carry out the procedure of tax return. There is a condition that fixes the maximum amount of donation (maximum amount of deduction but you receive a benefit of income tax refund and residence tax deduction, and your substantial taxation can be reduced to 2000 yen. Income tax refund is processed in the form of deducting residence tax payment
System of one-stop special scheme
This system is the one simplifying tax deduction or refund after tax payment and tax returning process is omitted. This system is only for a person who donate to 5 or less municipalities.
A Furusato donator sends one-stop special scheme application form (Application form tax deduction for Furusato donation scheme) and identification document which is in need of providing “My Number (Japanese ID number)” to an organization that represents municipal reception as often as you donate.
After that, a municipal office will tell information that is necessary for tax deduction and refund to a municipal office that has jurisdiction over where you live and a donator’s tax is deducted from the resident tax from the next year.
Its scheme concept looks complicated but what donators do is just submit necessary documents to an organization that represents municipal reception.
Tax return system | One-stop special scheme | |
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How many times you should go through procedure | 1time a year | as often as you donate |
Overview, condition |
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I recommend this to those people… |
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whose donation frequency is less than 5 times |
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Background of establishment of Furusato donation
Fukui prefectural governor advocated introduction of tax deduction for homeland donation in October, 2006 as a new conception to promote modification of revenue differentials to municipalities which is concerned about reduction of tax revenue because of depopulation and differentials between urban region and local region. This advocation is said to be the start of Furusato donation.
After this, Ministry of Public Management、Home Affairs、Posts and Telecommunications create new section about Furusato donation as a preparation room to create new policy and operate this donation.
Actually, there have been some of people who wanted to contribute to a region except for the living place before. Although athletes and entertainers had many chance of activity, some of them don’t transfer resident registration to where they live now and keep paying resident tax to their birthplace with special feeling. There is another viewpoint that the background of this donation is started from the situation that the government simply responded to this kind of demand and created new policy on Furusato donation.