In Japan, businesses are responsible for collecting VAT from their customers. Once collected, they must remit this tax to the Japanese tax authorities (the National Tax Agency, or NTA).
- Charging VAT:
Businesses apply VAT to the price of their goods and services when selling to customers. - Paying VAT:
When businesses purchase supplies or services, they also pay VAT on those inputs. - Reporting VAT:
Periodically, businesses file VAT returns with the NTA, declaring the amount of VAT they have collected from customers. - Remitting VAT:
After filing their VAT return, businesses remit the difference between the VAT collected from customers and the VAT paid on inputs. If the input VAT exceeds the collected VAT, the business can reclaim the difference as a refund.
Non-Japanese enterprises operating in Japan need to be aware of these requirements to ensure accurate pricing, maintain compliance, and avoid penalties.
The tax information provided here is based on legislation as it stands on the date of publication and may not reflect subsequent changes. We advise clients to seek tailored professional advice before making any decisions based on this information.