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resources-post-top-bg Japanese Consumption Tax set to increase. (Sept Update)

Japanese Consumption Tax set to increase. (Sept Update)

30th September 2019: Changes are coming into force on October 1st 2019.

Retailers are busy preparing for the more complicated tax scheme which is hoped will work as an incentive for cashless payments. A reward points system for small and mid-sized retailers will also be introduced for nine months (until June 2020).

When consumers purchase goods at these small and midsize stores with cashless payments, they will be given 5% of the purchase price in rewards points. The rate for these reward points will only be 2% at franchise chains of major operations (convenience stores).

The 8% rate will remain on some goods, such as non-alcoholic beverages and food.

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How will this change affect consumers and businesses?

As we covered in our previous blog on this topic, both consumers and businesses are still worried this change will create confusion around the different rates for similar goods. An example that highlights the potential confusion is sushi – meals from a conveyor belt in a sushi restaurant will be taxed at 10% (dining out). However, if sushi is purchased as takeout, it will be taxed at 8%. It is believed that some businesses may not have cash registers that will be able to cope with the change.

According to a survey carried out by the Chamber of Commerce, as of May 2019, 40% of small businesses had yet to introduce cash registers that will be able to handle the new regime.

For consumers, the new scheme will initially present five different effective tax rates depending on the types of good and the stores:

  • 3%
  • 5%
  • 6%
  • 8%
  • 10%

Efforts are being made by retailers to help consumers understand the different tax rates.

If you are concerned by how this change may impact your business, contact our experts.

See more Taxback International Articles

Japanese government to increase consumption tax (August 2019 update)

16th August: On the 1st October 2019 the Japanese government are planning to raise the consumption tax from 8% to 10%.

Raise in Consumption Tax Planned for Japan

1st July 2019: An increase in Consumption Tax from 8% to 10% had been planned for October 2019.

2019 has already brought many changes in the indirect tax world.

19th June 2019: What are the most important VAT updates from the first half of 2019?