Japan Tax Guide - for Beginners -

Significant changes on Consumption Tax


タグ: Japan Tax Guide - for Beginners -

Question: Can you explain about recent revision on the Consumption Tax Law?

Answer: Since October 1st, 2015, the treatment of Consumption Tax (C-tax) on international electronic services has been changed drastically.  Electronic services provided by foreign companies to Japanese customers are now subject to Japanese C-tax.

  Originally, the services provided internationally by foreign companies had been exempt from Japanese C-tax as the transactions were regarded to be made outside Japan. For Japanese e-commerce enterprises, however, it was unfair that their sales was regarded as domestic transaction which should be subject to C-tax, although same kind of sales by foreign enterprises should be exempt.  C-tax Law has been amended to correct such unfairness.

  “Electronic Services” provided by C-tax Law covers for instance the following transactions;

  • Provision of e-books, digital newspapers, music, videos, and software via internet
  • Services that provide customers with storage space to save their electronic data in the cloud
  • Distribution of advertisements via internet
  • English lessons provided via internet, etc.

  The revised tax law provides that taxation on international services via internet depends on the country where the customer is located, regardless of the place where the provider is. For example, when a person living in Japan buys e-book via website operated by US company, the sales transaction should be subject to Japanese C-tax.

  What should the US company do in this case? Do they have to file C-tax return in Japan? — Please see the next blog for the answer!


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Question: 最近の消費税法の改正について教えてください。

Answer: 2015年10月1日より、国境を越えた電子的サービスに対する消費税の取扱いが大きく変わりました。外国法人が日本の顧客に対してこのようなサービスを行った場合、日本で消費税が課されるようになっています。