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Company Formation Japan



Consumption Tax in Japan (VAT)

Updated on Thursday 21st December 2017

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consumption-tax-in-japan-(vat).jpgThe consumption tax in Japan is a national tax applied against the business volume, through self-assessment, and it functions similarly to the VAT in Europe. When a business becomes a taxable entity, it has to file a consumption tax in Japan on a regular basis. Our company formation consultants in Japan can offer information on how often the consumption tax has to be acquitted by a Japanese business.

Consumption tax rate in Japan

The consumption tax rate in Japan was increased to 8% since the 1st of April 2014, from a 5% rate prior to this date. 
However, the above-mentioned tax is due to be set at 10% in late 2019. The latest increase is meant to help in the reduction of the national debt of the country. 

When is the consumption tax in Japan required?

The consumption tax in Japan is due on all transactions effectuated by companies in this country, as well as on business to business transactions.
It implies that a company also has to pay it when it buys goods or services for its company activities. However, the acquitted consumption tax amount is compensated with the consumption tax amount which is collected.
Businesses which collect a consumption tax in Japan in their business activities have to file returns and are only due the difference between the received and the paid amount during the taxable period. Our company registration advisors in Japan can provide further details on this matter.

Compliance for the consumption tax in Japan

The frequency of the periodic consumption tax depends on the turnover of the trader. The tax filing enlists all the transactions of the business which are connected to the supply of the applicable services or goods.
Any consumption tax has to be paid at the same time with the tax return filing. The tax bodies in Japan request payments of consumption tax liabilities to be effectuated in the country at an authorized post office or bank. Our Japan company formation professionals can offer more information related to this subject.
If you require further details about the consumption tax (VAT) in Japan, or if you are interested in starting a company in Japan, please get in touch with us.


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