Information on consumption tax

Japan consumption tax is explained here.


Taxable person

Taxable sales

Japan consumption tax hike in 2019

Reduced tax rate questions answered

Japan consumption tax refund

Invoicing system in Japan

Simplified tax system


Consumption tax?

What is consumption tax?

Consumption tax is a tax you pay when you buy items at a store. The tax might be called Value-added tax (VAT) or Goods and services tax (GST) in foreign countries. So you must be familiar with this tax as a consumer. You start a business in Japan and then you are responsible for paying the tax since you receive it from consumers. Also, consumption tax is an indirect tax so you pay it to the Japan tax office on behalf of consumers. While consumers just pay the tax at a store and have nothing to do other than paying it, your corporation has to calculate consumption tax, file a tax return, and make the payment. However, the tax return cannot be completed just by collecting receipts. It’s more complicated. There are several things that you should know.

Tax documents

There are basically two key documents that can affect your corporation. One is about becoming a taxable person (who needs to file a tax return) and the other is about selection of tax systems. Both documents are submitted deliberately to get certain tax benefits. If you become a taxable person, you file a tax return and may be able to get a tax refund. This usually happens when there are a lot of expenses for starting your business. Also, there are two tax systems: general tax system and simplified tax system, and you take advantage of the tax benefits by selecting one of these systems.

If you need the submission of these documents, you have to prepare and submit them by the due dates.

When you issue an invoice

Some people are not sure about issuing an invoice when they are a non-taxable person. They would say ‘No consumption tax should be added to an invoice because no tax return (payment) is required?’. Actually,they can, even in this case, put the tax on their invoice. Therefore, what you put on your invoice does not change regardless of whether you are taxable or not and the tax systems you have selected. However, please be advised the tax rate will increase by 2%, from 8% to 10%, effective 1st October 2019.

If interested in our tax return preparation service, click here.