Almost everybody working in Japan has to pay taxes. There are however a few exceptions. If someone officially resides both in Japan and in another country, they might not have to pay taxes in Japan. There are individual agreements between countries, but usually, the main taxes are paid in the country where the person spends more time. As tax levels vary greatly according to the country, it is possible that one may have to pay all taxes in one country (say Japan), then the remaining difference in the other country if taxes overthere are higher. Please consult your embassy or country's tax authorities for more information.
Income tax (所得税 "shotokuzei ")
People whose yearly salary is lower than 1.300.000 yen are exempt of income tax. If taxes have already been paid (by the company, for instance), these workers should mention it to get a tax refund.
Expats whose salary is paid by a foreign company can have tax reduction or be exempted if taxes are already paid in the other country - and under certain conditions.
Resident tax (住民税 "juuminzei")
Actually not a tax on residence itself, but a local (as opposed to national) tax. It is lower than the income tax, but also depends on one's revenues.
Consumption tax (消費税 "shouhizei")
The current rate is 5%. It is the tax paid when buying/selling a product or service. The equivalent of the European VAT.
Do I have to declare my revenue myself ?
Normally, companies take care of declaring their employees's revenue. People who have to declare their own revenue are self-employed people. Freelance workers might have to do it as well if the companies they work for don't do it for them.
In theory, additional revenues earned from investments such as stocks or real estate, or any other kind of profitable activity, should also be declared by the individuals.
Usefuls links
Taxation in Japan gives information on corporate and personal income taxes in Japan, as well as expatriate compensation and consumption tax.
Taxes in Japan has details about the Japanese tax system.
