Japan has a unique approach to value-added taxation, referred to as a consumption tax, which serves an equivalent function to the VAT systems found in other countries. The Japanese consumption tax applies to most goods and services, providing a crucial revenue stream for the government. This tax is bifurcated into standard and reduced rates, each tailored to different categories of products. Below, you can explore detailed information about the VAT rates in Japan, including the current standard rate and the specific reduced rates, along with a comprehensive list of products subject to these rates.
The standard consumption tax rate in Japan stands at 10%, while a reduced rate of 8% is applied to certain essential items, including food and non-alcoholic beverages, as well as newspaper subscriptions published more than twice a week.
Standard VAT rate (consumption rate equivalent to VAT) |
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The standard VAT rate is the primary rate of VAT applied to goods and services within a country, covering most items except for certain specific goods and services that may qualify for a reduced rate. Some exceptions include essential items or goods and services that meet certain criteria outlined below. Japan applies a standard consumption rate (equivalent to VAT) of 10% (the sum of local and national consumption tax of 1.76% and 6.24% ) | |||
Reduced Consumption rateJapan has a reduced rate of 8%.
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Below are some goods and services eligible for a reduced consumption rate: | |||
Rate | Good or Services | ||
8% |
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Exempt From VAT |
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Zero rated(In Japan, the concept of “exempt with credit” transactions refers to certain transactions that are not subject to consumption tax and also allow for a credit on the related input tax. This means that while these transactions do not incur consumption tax, businesses can still claim a credit for the consumption tax they paid on their inputs related to these transactions. This is similar to zero-rated supplies in other countries.) |
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Additionally, businesses exceeding a specific revenue threshold must register for and remit consumption tax, though certain small businesses may qualify for exemption under Japan’s tax system. In fiscal year 2022, Japan’s consumption tax revenue amounted to approximately 23.1 trillion Japanese yen, accounting for 32.4% of the government’s general account revenue.
There are many more aspects to Japan’s “VAT” rates and system that require a deeper analysis and understading. If you wish to get informed on how these rates affect your international business please send us an email or schedule a call with one of our experts.
If you wish to get quickly informed about all basic and reduced VAT rates in Europe or VAT rates in the World you can view our dedicated page by clicking on the respective title.
Last Updated: 05/02/2025
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