note February 8, 2024
Japan Consumption Tax: A Foreigner's Quick Reference
Key notes on Japan's consumption tax system for foreign residents and business owners.
#japan #tax #finance #expat
Japan Consumption Tax (消費税) Quick Reference
Japan’s consumption tax (shohizei) is a value-added tax currently set at 10% for most goods and services, with a reduced rate of 8% for food and beverages (excluding dining out and alcohol) and newspaper subscriptions.
Current Rates
| Category | Rate |
|---|---|
| General goods & services | 10% |
| Food & non-alcoholic beverages (retail) | 8% |
| Newspaper subscriptions | 8% |
| Alcohol | 10% |
| Dining out | 10% |
Invoice System (適格請求書等保存方式)
Since October 2023, Japan has implemented the Qualified Invoice System (インボイス制度). Key points:
- Businesses must register as Qualified Invoice Issuers to issue tax-deductible invoices
- Registration number starts with T followed by 13 digits
- Unregistered small businesses can no longer pass tax credits to B2B customers
Thresholds for Registration
- Businesses with annual taxable sales ≤ ¥10 million in the base period are exempt from collecting consumption tax
- However, new invoice system registrations are voluntary for exempt businesses
Practical Notes
- Most prices in Japan are displayed as tax-inclusive (税込, zei-komi)
- Receipts must show both pre-tax amount and tax amount separately
- Quarterly or annual filing depending on business size