|2||Amount of Taxable Sales|
|3||Taxable Purchase that is eligible for tax credit|
|7||Exemption threshold for business|
|8||“The rate” which should be used to convert into JPY when the transfer of assets etc. is denominated in non-JPY currency|
|10||Consumption Tax rate|
|11||Selection of Taxable Person status|
※ “Consumption Tax” in this page includes “Local Consumption Tax”.
|2||Certified Public Tax Accountant (Tax Accountant Proxy)|
|3||Place for Tax Payment|
Consumption tax is levied on “Taxable Sales”. “Taxable sales” mean sales that satisfy all of the following four conditions.
For example, machinery rental fees and proceeds from the sale of machinery, buildings and other business assets are included in taxable sales in addition to such things as proceeds from sales of products, contract work and services.
“Amount of Taxable Sales” means the sum of the amount of sales related to transactions subject to consumption tax (excluding consumption tax) and the amount of sales related to transaction such as export transaction.
If there is any amount related to returns, discounts or rebates, the sum of these amounts (excluding consumption tax) should be deducted from the Amount of Taxable Sales.
“Taxable Purchases that is eligible for tax credit” mean the transfer or lease of assets from another party to a business or provisions of services received by that business inside Japan. For example, Taxable Purchases include not only the procurement of products and goods for inventory but also the purchase of buildings, machinery or consumables for business purposes, repair expenses and fuel costs for delivery vehicles. However, interest and discount fees, insurance premiums and the purchase or lease of land are non-taxable transactions and therefore not classified as Taxable Purchase. The payment of salaries and wages that is not subject to tax is also excluded from Taxable Purchases.
Purchasing goods for inventory or receiving services from consumers or tax-exempt businesses are also considered as Taxable Purchases.
When purchasing depreciable assets, the entire amount expended is taxable for the year of the purchase.
“Taxable Period” is base of time used for calculating the amount of consumption tax payable. In principle, the “Taxable Period” for sole proprietors is from January 1st to December 31st, and the Taxable Period for corporations is their business year.
“Base Period” is a benchmark period for determining whether or not a business is a “Taxable Person”.
In principle, the Base Period for sole proprietors is the second preceding year before the Taxable Period, and the Base Period for corporations is the second preceding business year before the Taxable Period.
Business which falls under either of the following categories is a “Taxable Person” who is required to file the final return.
Business needs to submit the following notification to the District Director of the Tax Office with jurisdiction over the Place for tax payment when it is categorized(1)or(3)above.
Category1：“Notification of Taxable Enterprise Status for Consumption Tax (For base period)”
Category3：“Notification of Taxable Enterprise Status for Consumption Tax (For specified period)”
In principle, a business is exempted from consumption tax obligation in a Taxable Period if its taxable sales in the Base Period for the Taxable Period are equal to or less than 10million yen.
In principle, for calculating sales etc., each transfer of assets denominated in non-JPY currency shall be converted into JPY, by each transfer of assets, using the market rate (T.T.M.: Telegram Transfer Middle Rate) on the date of the transfer of assets etc..
A foreign business is defined as non-resident (Article 2, Paragraph 1, Item 5 of the Income Tax Act) and foreign corporation (Article 2, Item 4 of the Corporation Tax Act).
The Consumption Tax rate is as follows.
|Until September 30,2019||From October 1,2019|
|Standard tax rate||Reduced tax rate|
(17/63 of the amount of National Consumption Tax)
(22/78 of the amount of National Consumption Tax)
(22/78 of the amount of National Consumption Tax)
|(Note)||Although the reduced tax rate of Consumption Tax (８％) is same as the rate that was effective until September 30, 2019, the breakdown of National Consumption Tax rate (from 6.3％ to 6.24％) and Local Consumption Tax rate (from 1.7％ to 1.76％) has been changed.|
[Items subject to the reduced tax rate]
A business which is not a Taxable Person (“No.6 Taxable Person”(1)or(3)) but choose to be a Taxable Person (“No.6 Taxable Person”(2)) should submit “Report on the Selection of Taxable Proprietor Status for Consumption Tax” to the District Director of the Tax Office with jurisdiction over the Place for tax payment. In principal, the “Report on the Selection of Taxable Proprietor Status for Consumption Tax” must be submitted by the day preceding the first day of the Taxable Period for which a business intends to choose to be a Taxable Person.
A Sole proprietor who does not have or will not have a domicile and residence (excluding office) in Japan or a corporation which does not have or will not have its head office or principal office in Japan and do not or will not have an office or establishment in Japan needs to designate a resident(Tax Agent) who does necessary procedures related to Japanese tax payments on behalf of the taxpayer.
If you designate a Tax Agent, you should submit the ”Notification of Tax Agent” to the District Director of the Tax Office with jurisdiction over the Place for tax payment. (Article 117 of the Act on General Rules for National Taxes)
A Tax Accountant Proxy and a Tax Agent can be the same person.
Certified Public Tax Accountants and Certified Public Tax Accountants Corporations (hereinafter referred to as “CPTA etc.”) provide the services as follows under the Certified Public Tax Accountant Act.
These services must not be performed by persons other than CPTA etc., even at no charge.
Returns and notifications etc. have to be submitted to the District Director of the Tax Office with jurisdiction over the “Place for Tax Payment”
In principle, “Place for Tax Payment” for foreign businesses are as follows: