Foreign digital service providers who are registered for VAT in Japan are typically required to submit VAT returns on a quarterly basis. Here’s how the process generally works:
- Quarterly Interim Filing:
VAT returns are typically filed every quarter, depending on the amount of VAT from the previous year. These returns reflect the VAT collected from sales to Japanese consumers during that period. Deadlines for filing and payment are generally set within two months after the end of each quarter. - Annual Return:
In addition to interim returns, businesses must submit an annual return. This return provides a consolidated overview of all VAT transactions throughout the year. - Electronic Filing:
VAT returns are generally filed electronically, making the process more convenient and accessible for foreign companies. The Japanese tax authorities provide online platforms for the submission of these returns. However, note that all displays and instructions are in Japanese. - Payment of VAT:
The VAT collected must be remitted to the Japanese tax authorities by the deadline associated with each quarterly filing. Late payments can incur penalties and interest charges. - Record-Keeping:
It is crucial for digital service providers to maintain accurate records of all sales, VAT collected, and any adjustments. These records must support the figures reported in the VAT returns and may be required for audit purposes.
Foreign digital service providers should ensure they understand and meet these filing requirements to avoid penalties and maintain good standing with the Japanese tax authorities. Consulting with a tax professional experienced in Japanese VAT can provide valuable assistance in managing these obligations effectively.
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.