Japan Consumption Tax rise implementation

Thu 25th Apr 2013

The Japanese Consumption Tax authorities have issued initial procedures for managing the planned increase in tax.  The Consumption Tax will rise from 5% to 10% by 2015. in two steps.

The Japanese VAT tax will initially rise to 8% on 1 April 2014, and then to 10% on 1 October 2015.

During the transition period, the following treatment of certain transactions will apply:

  • Interim payments due after 1 April 2014 based on contracts signed before this date will be payable at the 5% rate
  • Lease payments for contracts entered into up to 30 September 2013 will be charged at 5%
  • Short term contracts entered into up until 30 September 2013 will be charged at 5%
  • Payments on the supplies of goods or services made prior to 1 April 2014 but consumed after that date will be charged at the 5% rate.
  • Payments on long term contracts for work done up until 1 April 2014 will be at the 5% rate.

There are plans to issue further guidance for refundable tax credits and the tax identification number system.