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OCTUBRE 18

Japan Travel Guide

Cost, Money & Banks: Consumption Tax



Consumption tax is payable on:
  • Compensation received by business enterprises for the transfer or use of assets and the provision of services in Japan;
  • Imports of goods.
The base rate is 5% (4% national consumption tax and 1% local consumption tax.) Consumption tax is an "in and out" tax; in other words, businesses will be subject to consumption tax on supplies they purchase and will withhold it on goods they sell. The business is prescribed to regularly pay the difference among the tax it has experienced on its supplies and the tax is has charged on its goods or services. Certain supplies are non-taxable.

Small enterprises with the capital of less than ¥10m and Japanese branches of foreign corpora-tions may be exonerated from consumption tax for the first 2 years after formation. It is also conceivable for small and medium-sized enterprises to choose to pay consumption tax at a simplified fixed rate.

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