While Japanese employees have taxes withheld from their pay down to the last yen, tax investigations involving Chinese international students abroad have highlighted cases in which seizure of assets becomes difficult after they return home. Alongside new arrests over underground banking, the limits of the national tax authorities' ability to identify taxable income have come into focus.
In September 2026, Kyoto Prefectural Police arrested 3 people, including Chinese nationals serving as company officers, on suspicion of violating the Banking Act. They are suspected of conducting unlicensed foreign-exchange transactions in Japanese yen and Chinese renminbi, receiving approximately ¥150 million in cash over 12 transactions and remitting renminbi worth approximately ¥600 million to designated accounts in China.
The author describes a case in which funds from Chinese international students in Japan were pooled through underground banks and invested. The national tax authorities investigate suspected failures to file tax returns or pay taxes, but the author notes that collection often becomes difficult when international students return home.
Factors that make it difficult to identify and tax profits earned while international students reside in Japan include cases in which they disappear abroad and insufficient domestic assets. If they return home without appointing a tax agent, tax collection becomes considerably more difficult.