When it comes to salary negotiation in Japan, companies often have the upper hand. Not only do they know what they’re willing to pay for a position, but it is very common for companies to ask you to disclose your current compensation, leading them to make an offer based off it.
While you can always try refusing to disclose it, sometimes companies will literally not move forward with your application unless you do so. If you find yourself in this predicament, and are an in demand software developer, you can move on to another company (which is likely to be a better place to work). But not everyone is in such a fortunate position.
So what happens if you really do need to give a number? It might be tempting to embellish your current salary. But besides the ethical considerations of lying, you should keep in mind that companies will be able to roughly tell what your compensation actually was (assuming you’ve been working in Japan).
The most likely way a company will find this out is through your withholding tax statement (源泉徴収票) from the previous company for the year-end tax adjustment declaration (年末調整). The year-end tax adjustment is something employers are generally obligated to do on the behalf of employees. But it is possible to get around this by not giving the withholding tax statement to the company, and either asserting your previous employer didn’t give it to you in time, or that you need to file a return yourself because you did something like a side-job.
But even if you don’t share your withholding tax statement, there’s another way they can figure out what your salary is: your local income tax payment. In Japan, local tax payments start in June of every year, and are based on your income in the previous calendar year. If you’re a salaried employee, this tax is deducted from your salary, and paid by the employer. To facilitate this, your local government will send your employer two different notifications: one for your employer (特別徴収義務者用) and one for you (納税者用).
In the notification to your employer, it will show your name and the total amount of local tax you need to pay. Based on this, they can tell what your total income for the last year was. It’s impossible for them to confirm your exact salary, because you may have had certain deductions or extra income outside of your main job. But if you claimed to have a significantly different salary than you actually had, they could probably tell.
As an aside, this is also how people who are prohibited from doing side-jobs by their company, but do them anyways are often caught. However, you can get around this aspect by selecting the option to pay the local tax on your extra income yourself. Because paying yourself is only an option for extra income and not salaried income though, this isn’t a way around having your future employer figure out your compensation.
If your employer is unethical, they have an even more devious way of finding out your compensation details. While the tax notification for individuals that is sent to the company is supposed to be passed on directly to the employee, some local governments will send it unsealed! If your government happened to be one of those, then your employer could theoretically look at it, and see your income divided into salary income and other income, making it even easier for them to determine what your previous salary was.
There is one wrinkle in all of this though. While a company may learn your taxable income, they won’t learn the exact nature of your compensation. For example, it will be impossible to tell if you got a raise midway through the year, or what any bonus was going to be should you have continued working for the company the rest of the year.
Perhaps because of this, some companies will ask to see the previous years’ tax withholding statement before making a formal offer. There’s no legitimate reason they need this, and it is used solely to judge if you were lying about your compensation. While you’re under no obligation to share this, they could theoretically decline to make an offer if you were not to share this.
But if the company is not so paranoid, you may be able to get a job while exaggerating your current compensation. What will happen if you are found out after you’re hired? While I’ve heard rumors it is grounds for termination, my research didn’t find any evidence that’s the case. One article specifically said it would be difficult to terminate someone one those grounds alone, though it could result in disciplinary action from the company. If you went through a recruiting agency, that agency may also refuse to work with you again. And obviously, being seen as a liar isn’t good for your career prospects at that company.
In conclusion, while it is unlikely that a future employer will be able to find out exactly what you were paid before, they’ll have a rough idea of what you were paid. If you do claim to have higher compensation than you did, it will probably be challenging for them to prove you were lying beyond any doubt, but might have consequences for your career regardless.