This explains Japanese VAT in simple terms, including its key components and processes.
- Rates: Japan has a standard VAT rate of 10% and a reduced rate of 8% for essential items like food and newspapers.
- Collection Process:
Businesses charge VAT to customers on their sales and pay VAT on their purchases. They report the difference between the collected VAT and the paid VAT in periodic tax filings. - Reporting:
Businesses must file regular VAT returns, usually on a quarterly basis, to the National Tax Agency (NTA). They remit the difference between the VAT collected from customers and the VAT paid on business expenses. - Exemptions:
Certain goods and services, such as medical care and education, may be exempt from VAT. - Reclaiming VAT:
If a business pays more VAT than it collects, it can reclaim the difference, helping reduce its tax liability.
A tax professional can guide you through these components and processes to ensure your business adheres to the rules while maximizing available benefits.
The 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.