Japan considers reduced Consumption Tax rates

Mon 25th May 2015

Following the abandonment of the planned second rise in Japanese Consumption Tax to 10% – scheduled for 2015 – the possibility of the introduction of reduced rates is being reviewed to help smooth another attempt.

Plans to raise Consumption Tax from 5% to 10% were announced in 2011 as a two-stage initiative. The first tax rise, from 5% to 8% went through in 2014 on schedule. However, Japan suffered a sharp slow down in GDP and consumption as a result, and the second rise was delayed.

In order to soften the blow of the 2017 rescheduled Consumption Tax rise, the ruling Liberal Democrat party is reviewing reduced rates on essentials. This includes a reduced rate on all foodstuffs, excluding alcohol. The rates being discussed so far are either 5% or 8% once the standard rate is 10%.