Japan has raised its main Consumption Tax rate from 8% to 10% on 1 October 2019. It has also created a new reduced rate of 8% for basic supplies.
This is the second rise in the indirect tax in recent years. The last was a 2014 increase from 5% to 8%. This long-planned second rise has been delayed twice due to fears of triggering inflation. The rise to 10% is mostly to help fund the fast rising social and health costs of an ageing population. Japan will also introduce Tax Qualified e-Invoices from 2023 which will provide a permanent process for the interim Transitional Invoice Retention System.
8% reduced Consumption Tax rate
The new 8% rate will apply to: some food and beverages, except for alcoholic drinks, restaurants or cafes. Also, on newspapers published more than twice a week (under subscription contracts).
Japanese Consumption Tax is made-up of two elements:
- 7.7% national tax
- 2.2% local tax
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