If your company plans to venture into international markets, especially in Asian countries, you may find Japan of interest.
In Japan, the concept of Value Added Tax (VAT) has been replaced by Consumption Tax (CT), and the calculations are different.
Before initiating your first transaction, it is advisable to get acquainted with and register for Japanese Consumption Tax in advance.
Consumption Tax Registration
The annual sales threshold for registration in Japan is 10,000,000 Japanese Yen (based on local sales).
If you are an Amazon seller, registering for Consumption Tax in advance is necessary to comply with the subsequent invoice retention requirements.
The standard Consumption Tax rate in Japan is 10%, while certain food and beverages have an 8% rate.
It’s important to note that non-resident foreign businesses must designate a Japanese resident tax agent to communicate with the tax authorities.
Consumption Tax Compliance
Similar to other countries, once you register as a taxpayer, you must fulfill ongoing obligations:
- Issue compliant sales invoices
- Maintain sales records (including sales invoices, purchase invoices, transaction records, etc.)
- Regularly submit returns and pay taxes according to the reporting period
- Update company information in case of any changes
Consumption Tax Compliance
Similar to other countries, once you register as a taxpayer, you must fulfill ongoing obligations:
- Issue compliant sales invoices
- Maintain sales records (including sales invoices, purchase invoices, transaction records, etc.)
- Regularly submit returns and pay taxes according to the reporting period
- Update company information in case of any changes
Consequences of Not Registering for JCT
If you sell goods or services to customers within Japan, you are required to issue invoices.
However, without a Japanese Consumption Tax registration number, you cannot issue compliant invoices, which can also impact e-commerce platforms.
For instance, Amazon requires sellers to retain all sales invoices to meet compliance requirements.
Additionally, you won’t be able to claim Consumption Tax deductions for purchases, affecting your operations.
If you require assistance, our team is here to provide registration and subsequent reporting services.
