SOCIAL SECURITY

News Release

United States and Japan Sign Social Security Agreement

Agreement to Benefit U.S. Workers and Employers

Jo Anne Barnhart, Commissioner of Social Security, signed an agreement today with Japanese Ambassador Ryozo Kato that will remove from U.S. citizens working for U.S. companies in Japan the burden of paying social security taxes to both countries. The agreement also will remove the double taxation requirement for Japanese citizens working for Japanese companies in the United States. “This agreement eliminates a serious and unnecessary impediment to American and Japanese businesses and their employees,” Commissioner Barnhart stated. “Just as important, it promotes equity and fairness for workers who divide their careers between our two countries.”

Currently, U.S. companies that employ U.S. citizens in Japan are required to contribute to both the U.S. and Japanese social security systems. When the agreement takes effect, U.S. and Japanese employers and their employees will contribute to either the U.S. or Japanese social security systems, but not both. This will result in approximately 15,600 U.S. workers and their employers sharing in tax savings of $632 million over the first five years of the agreement.

The agreement also will improve social security protection for people who work in both countries. At present, some workers who have divided their careers between the United States and Japan fail to qualify for social security benefits from one or both countries because they do not meet minimum eligibility requirements. Under the agreement it will be possible for workers and their family members to qualify for pro-rated U.S. or Japanese benefits based on combined credits from both countries. This will result in approximately 24,000 U.S. and Japanese workers receiving benefits after the first five years of the agreement.

The agreement must be reviewed by Congress and approved by the Japanese Diet before it can take effect. The United States has similar social security agreements with 20 other countries, including Australia, Canada, Chile, South Korea, and nearly every country in Western Europe.

NOTE TO CORRESPONDENTS: A fact sheet providing more information about the Social Security agreement between the U.S. and Japan is attached. To find out more about agreements with other countries go to http://www.socialsecurity.gov/international/.

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