Japan Tax Guide

Is there any disadvantage to a Japanese customer on consumption tax if you are not a “registered foreign business”?

Creation date2017/07/26 Last updated2022/12/05


Question: For a Japanese corporation who receive “B2C (business to customer) electronic service” from a foreign corporation, is there any disadvantage depending on whether the foreign corporation is registered at National Tax Agency (NTA) or not?

Answer: Yes, the treatment of the purchase tax credit on consumption tax (C-tax) is different.

From October 2015, electronic service provided by a foreign corporation to a Japanese corporations is subject to C-tax in Japan.

Regarding the “B2C electronic services” under “electronic service provided by the foreign corporation”, only services provided by the registered foreign business can be applied to a purchase tax credit for Japanese corporations. On the other hand, if the foreign corporation is not a registered foreign business, a purchase tax credit is not allowed to Japanese corporations. Therefore, it can be said that it will be disadvantageous for Japanese business customers. The foreign corporation is required to be registered at NTA and file annual C-tax return for Japanese corporations to claim a purchase tax credit.

As of April 2017, there are 71 foreign corporations registered. You can see the list on NTA’s website. The registered foreign business is required to include specific information, such as “its registration number” and “indication that the registered foreign business is liable for consumption tax”, etc. on an invoice. Otherwise, Japanese corporations are not allowed to claim a purchase tax credit.

For more details about the B2C electronic service, please refer to our blog on December 2015.

Please contact us, TOMA Consulting Group, if you are interested in registration at NTA.

On-demand Seminar Information

A Guide to the Qualified Invoice System (On-demand Seminar)

The Qualified Invoice System, starting October 2023, introduces new changes to the Japanese consumption tax rules and will affect many businesses across Japan.

The system requires a redesign of existing invoices, as well as a review of the business’ consumption tax status and suppliers.

This online seminar aims to give you an overall understanding of the Qualified Invoice System and provide measures to help you navigate the new requirements.

>>Click here for seminar details and registration


Question: 外国企業から「消費者向け電気通信利用役務の提供」を受ける国内事業者にとって、その外国企業が日本の税務署に登録された事業者(登録国外事業者)であるかどうかによって影響がありますか?

 Answer: 消費税の仕入税額控除の取り扱いに違いがあります。