Japan: Consumption tax, delayed rate increase; new invoicing system

Japan: Consumption tax, delayed rate increase

The Japanese Diet on 18 November 2016 passed legislation that would postpone the consumption tax rate increase by two and one-half years. Thus, the consumption tax rate increase—from 8% to 10%—would be effective 1 October 2019.

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A multiple tax rate system, under which the reduced tax rate of 8% will be applied to certain transactions including sales of food and beverages, also would be introduced along with the increase in the consumption tax rate. 

Also, an invoicing system is to be introduced so that the creditable tax amount can be calculated properly under the multiple tax rate system, but the effective date for the invoicing system would be delayed by four years after the introduction of the multiple rate system and thus would be effective 1 October 2023. The four-year delay is intended to afford businesses sufficient time to prepare for the new system. 

 

Read a November 2016 report [PDF 395 KB] prepared by the KPMG member firm in Japan: Consumption Tax - Introduction of Reduced Tax Rate & Invoicing System

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