In principle, a business that makes taxable supplies in Japan exceeding 10 million Japanese yen (JPY) in the base period or the specified period automatically becomes a taxpayer.
Further, for a newly established company, it will automatically be a taxpayer if either its paid-in capital at the beginning of the fiscal year exceeds JPY10 million or it is controlled by a person (including individuals and companies) whose amount of taxable sales corresponding to the theoretical base period of the newly established company exceeds JPY500 million.
Yes, upon filing of an election to become a taxpayer.
Yes, it is available for an overseas company. An overseas company is required to nominate a fiscal representative upon election.
please note that Japan’s consumption tax law currently has not adopted a VAT invoicing system, although Japan’s consumption tax works like a credit method consumption tax. Instead, Japan requires taxpayers to either maintain books and records to support amounts claimed for the credit or to use a simplified system for estimating the credit. All valid tax invoices must contain the following particulars:
- the full name of the supplier
- the date of the taxable transaction
- the description of the taxable transaction
- the total amount charged on the taxable transaction (by the applicable rate from 1 October 2019)
- the full name of the person to whom the goods or services are supplied.
It is proposed that an invoicing system, that is similar to a VAT invoicing system, will come into effect from October 2023. A 4-year transitional period will be provided for the period from October 2019 to October 2023. During this period, in principle, business operators will need to indicate items subject to a reduced rate under the multiple-rate system and the total sales amounts by each tax rate in preparing their accounting records and invoices. It is acceptable to use a simplified method to calculate the tax amount based on an estimate of sales eligible for the reduced rate for small business operators whose taxable sales during the base period do not exceed JPY50 million.